Welsh Businesses Cite Strong Demand Despite Confidence Drop
Business confidence in Wales has fallen sharply, dropping 38 points to 16% in September, according to the latest Lloyds Business Barometer. This decline follows a 54% reading in August 2026.
Welsh companies reported lower confidence in their trading prospects, down 43 points to 22%, and optimism about the broader economy also fell, dropping 34 points to 9%.
Strong Demand Amid Falling Confidence
Despite the drop in confidence, Welsh firms cited stronger customer and market demand as a key driver of optimism. 51% reported improved conditions, and 36% noted easing inflation or cost pressures.
Among businesses expecting growth in the next year, 76% attributed it to stronger customer demand, while 43% pointed to increased investment in capacity or technology.
Looking ahead, Welsh businesses plan to focus on team investment through training (46%), entering new markets (38%), and developing new products or services (36%) as primary growth strategies.
Nathan Morgan, Area Director for Wales at Lloyds, noted, “While confidence has dipped this month, it’s positive to see businesses in Wales continuing to invest in the things that will support their long-term growth.
Upskilling is clearly front of mind, with almost half of firms looking to invest in training over the next six months.
Alongside plans to enter new markets and develop new products and services, that suggests businesses are continuing to look ahead and adapt despite a more challenging backdrop.
Strong customer demand also remains an important source of optimism, and firms that continue to invest in their people and capabilities will be well placed to capitalize on new opportunities as they emerge.”
UK-Wide Trends and Challenges
Across the UK, business confidence fell 12 points to 41% in September, the lowest since April 2025. This follows a 53% reading in August, the second-highest this year.
The decline was driven by falling economic optimism, as businesses responded to higher energy prices due to renewed tensions in the Middle East. Trading outlooks also dropped, with 57% of firms expecting increased output, down 9 points from August.
Among those anticipating weaker activity, the main concerns were economic uncertainty, higher costs, and weaker customer demand.
Amanda Murphy, CEO of Lloyds Business and Commercial Banking, commented, “While confidence among larger firms remains strong, smaller businesses have seen a fall in sentiment as they face higher costs, inflationary pressures, and global uncertainty.
Overall confidence remains above its long-term average, and most businesses still expect activity to grow over the coming year, highlighting the resilience of UK firms.
Supporting smaller firms to participate in future growth is essential in the upcoming months.”
According to local reports, ensuring smaller firms can effectively contribute to and benefit from economic expansion will be vital moving forward.
