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.
Q2 2017 Key Findings:
- The BCM Confidence Index for Wales is now in positive territory, but at +2.4 in Q2 2017 it is still significantly behind the UK average of +6.7
- This is the first time the BCM Confidence Index for Wales has been positive for more than a year
- Export growth is currently lagging behind the long-term average though exporters do expect improvements next year
- While businesses appear bullish about overall sales growth over the next year, they do not expect to be able to raise prices significantly
- Investments are set to slow, potentially because at 66% in Q2 2017, spare capacity in Wales is the highest of any nation or region
Martin Warren, ICAEW Wales Director explains:
“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.
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 still weak, at +2.4 in Q2 2017, compared to the UK average of +6.7.
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 over the next year though (3.6%).
Domestic sales in Wales are growing at a faster rate than export sales and are predicted to maintain that pace again in the year ahead.
Firms seem bullish about overall sales growth over the next year, but they do not expect to be able to raise prices by any significant amount (just 0.5%). 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.