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ICAEW Business Confidence Monitor (BCM): Wales

Q2 2019: Business confidence hit by ongoing uncertainty and slower profits growth

Welsh company confidence has fallen further in Q2 2019. Companies also report subdued sales growth, especially in terms of exports, and are seeing profits expand at a slower rate than a year ago. As a result, businesses are planning to curb investment growth in the year ahead. 

Business confidence trend in Wales

Business confidence in Wales is markedly lower in Q2 2019, with the index standing at -22.1. This is Wales’ lowest score in a decade and represents the fourth successive quarter of declining business confidence. Brexit may be a factor here, as Wales currently receives high levels of EU funding.

Domestic sales and exports

Weaker business confidence may also partly stem from the sluggish sales growth reported in the year to Q2 2019. Domestic sales are increasing broadly in line with the UK average, at 3.6% year-on-year. However, exports are rising at the more modest rate of 2.2%, almost one percentage point lower than the UK average. 


Subdued sales growth also appears to be impeding profits growth. These are increasing by just 2.0% year-on-year in Q2 2019, among the slowest rates across the whole of the UK. 

Business challenges

Businesses in the region also face several challenges. Strikingly, 34% of companies report late payments as a growing concern. This is significantly above the UK average and may partly be related to sluggish domestic sales and exports growth. As well as this, customer demand is a source of increasing difficulty for 30% of businesses, compared to 24% a year ago.


Against this backdrop, businesses are limiting their increases in investment spending. Research & Development (R&D) budgets and capital investment are rising more slowly than a year ago, at 2.7% and 1.1%, compared to 4.0% and 2.6% respectively. 

Prospects for the next 12 months

The overall weakness in company confidence is also revealing itself through muted expectations for the year ahead. A moderation in domestic sales growth is expected to 2.6%, while exports are forecast to rise at a similar rate to the past year. Companies are also displaying caution in their investment intentions, with projected growth in R&D and capital investment spending of just 0.4% and 0.7% respectively.