Welsh business confidence up for the first time in more than a year but is still lagging behind the UK average, says ICAEW Wales.
Business confidence in Wales has moved into positive territory for the first time in more than a year, but is still well down on the rest of the UK according to the latest ICAEW UK Confidence Monitor (BCM). Despite the fall in the value of Sterling since the EU Referendum, export growth is still slow, however Welsh exporters are hopeful that sales will improve over the next year.
“We have waited a long time to see business confidence in Wales turn positive. While it is encouraging to see an end to a long period of negative sentiment, as a nation we are still nowhere near as upbeat about our business prospects as others trading elsewhere in the UK.
Welsh businesses expect to see improvement in their sales but are cautious about raising their prices with investments slowing and inflation rising. Our exports are still lagging behind the long-term average and with domestic sales slowing, firms here will be keeping a close eye on the UK General Election.
Whoever forms the next UK Government will need to ensure Britain’s future is more prosperous than recent years and that that prosperity reaches all parts of Wales.”
Confidence is now positive but not especially so, at +2.4 in Q2 2017, compared to the UK average of +6.7.
Certainly, exports have shown little sign of responding to the fall in sterling, with growth of 1.3% per year in Q2 2017, well below the long-term average of about 3%. Exporters do expect an improvement next year though (3.6%).
Domestic sales in Wales are growing at a faster rate than domestic sales and are predicted to maintain that pace again in the year ahead.
Firms seem bullish on sales but they do not expect to be able to raise prices by any significant amount (just 0.5% next year). At the same time, input price inflation is currently running at 2% a year and is set for 1.7% in the coming year.
All types of investment are set to slow, potentially because spare capacity in Wales is the highest of any nation or region, at 66% in Q2 2017.
For more information: www.icaew.com/bcm