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Business confidence in Wales lower than º£½ÇÊÓÆµ average - survey

The ICAEW’s Business Confidence Monitor for Wales in Q3 2023 saw optimism fall into negative territory at -3.2

The tax burden was cited by 42% of businesses in Wales as a growing issue(Image: SHARED CONTENT UNIT)

Business confidence in Wales fell below the º£½ÇÊÓÆµ average in Q3 2023, despite Wales having been among the more optimistic areas of the º£½ÇÊÓÆµ in the previous quarter. According to the latest ICAEW’s Business Confidence Monitor for Wales, confidence in the latest quarter fell to negative territory at -3.2, significantly lower than the º£½ÇÊÓÆµ average of +2.9.

However, Welsh businesses continue to report strong growth in domestic sales (6.3%) in the 12 months to Q3, faster than other º£½ÇÊÓÆµ nations and regions. Domestic sales growth is expected to slow to 4.7% in the year ahead, in line with the average rate for the º£½ÇÊÓÆµ.

The survey also found that export growth has performed strongly, with sales growing by 4.5% in the year to Q3 2023. However this is expected to slow to 2.1%, below the historical average and one of the lowest rates across the º£½ÇÊÓÆµ.

Read more: Occupier demand for commercial space in Wales at three year low

Cost pressures eased significantly for Welsh firms in Q3, as input price inflation fell for the first time since early 2020. Annual price inflation is expected to reduce further to 3.1% in the next 12 months.

Selling prices continued to increase, but are expected to slow to 2.0% in the coming year. In terms of profits, these grew by 3.1% in the year to Q3 2023 and are expected to grow at a similar rate in the next 12 months. While the tax burden was cited by 42% of businesses in Wales as a growing issue in the latest quarter, making it more prominent in Wales than the rest of the º£½ÇÊÓÆµ.

Bank charges and late payments also grew, with 28% of Welsh companies reporting the former as a challenge - the highest rate in over a decade.

Around 40% of Welsh businesses reported staff turnover as a growing concern, more prominent than other nations and regions, while employment growth moderated to 2.0% in the 12 months to Q3 2023. Salary increases remained broadly stable at 4.4%, near the record high reported in the previous quarter.