ICAEW’s Business Confidence Monitor (BCM) index, shows that sentiment in Wales in Q4 2025 fell to -7.8,  which is one of the biggest falls in confidence in the UK from quarter to quarter, with Q3 sentiment sitting at +0.9. 

Confidence in Wales is still above the UK average, which sits at -11.1. Historically, Wales tends to sit at a confidence level of +2.8.

Like the other nations within the UK, the tax burden has been a significant challenge for Welsh firms, with 69% citing it as an issue. April’s tax changes, including the increase in employer’s national insurance contributions, continue to have a lasting impact. 

Regulation and a lack of government support were also issues for Welsh businesses, with 60% and 23% of businesses respectively citing them as a challenge. 

Despite modest growth in domestic sales and exports in 2025, Welsh businesses expect exports to rise by a record 7.0% in the year ahead — almost double the increase anticipated across the UK (4.1%). This is a good sign that points to a more positive 2026 for Welsh exporters. 

Overall, however, growth forecasts are weak for Wales, with profit growth expected to slow to 1% over the next 12 months. 

Employment growth rose by just 0.1% in Q4 — the slowest expansion of any UK nation or region. This is expected to increase to 0.6% in 2026 but will remain below both the historical average for Wales (1.2%) and projections for the rest of the UK (1.3%). Despite the low employment growth, salaries increased to 3.3% growth in Q4 last year. It is likely to dip to 2.4% in 2026. 

“These are undoubtedly uncertain times for businesses, with a range of economic pressures shaping decision-making and sentiment. It’s understandable that confidence has fallen, given the wider national picture and the challenges firms continue to navigate,” Robert Lloyd Griffiths, ICAEW Director, Wales, said. “While sentiment is currently at a low ebb, the strong expectations for export growth this year is an encouraging sign that a modest economic improvement is possible in the coming months. Welsh businesses continue to demonstrate adaptability and ambition, even in a difficult climate.”

It is vital that the government creates an environment that supports investment, reduces complexity and enables growth, Griffiths added. “Both the Welsh and UK governments have an important role to play in enabling the conditions for businesses to grow, including ensuring that support and relief measures keep pace with the rising cost of doing business.”