Business confidence in Wales fell 10 points in January to 26%, the lowest of any region or nation in the UK, according to Lloyds Bank’s latest business barometer.

Businesses in Wales reported lower confidence in their own business prospects month-on-month, down 23 points to 24%. Factoring in their optimism about the economy in general, up three points to 27%, that gives an overall confidence reading of 26%.

The Business Barometer, which surveys 1,200 businesses monthly, provides early signals on UK economic trends, both regionally and nationally.

A net balance of 12% of businesses in Wales expect to increase workforces over the next year, down 17 points from last month and the lowest reading of any region and nation in the UK.

Overall, UK business confidence was flat in January, falling just one point from December’s reading of 40% to 39%. Businesses remained positive about their future business prospects, despite falling two points month-on-month to 41%, and were upbeat about the economy as a whole, reporting a reading of 38 %, up one point from the December result. The net balance of companies expecting to create new jobs over the next twelve months fell slightly by four points to 29%.

Every nation and region in the UK maintained a positive overall confidence reading in January, with four reporting a higher reading than last month. Yorkshire and the Humber (up 13 points to 48%), Scotland (up 13 points to 37%), the West Midlands (up nine points to 39%) and the South West (up up eight points to 37%) all had stronger monthly confidence readings, with Yorkshire and the Humber now the most optimistic region.

Amanda Dorel, Regional Director for Wales at Lloyds Bank Commercial Banking, said:

“The approach taken to manage the lockdown restrictions in Wales has not been without its challenges for businesses, some of which will have faced reduced capacity for longer than they would have hoped.

“The latest easing of restrictions will give businesses across the country a much-needed boost and allow them to look to the future with greater optimism. We will stand by businesses, providing them with the support and guidance they need. to complete a full recovery.”

The performance of the industrial sector was mixed in January, with manufacturer confidence rising three points to 43%, hitting its highest level in three months due to an easing of supply chain pressures. Retail confidence also increased (+one point to 44%) while business confidence in IT/Communications remains particularly strong at 72%.

Omicron’s impact over the festive period meant that the services sector extended its recent run of modest declines in January, dropping one point to 38%. On the positive side, the hospitality industry recovered some of the December decline, rising from 6% to 38%.

Hann-Ju Ho, Lloyds Bank Commercial Banking Senior Economist, said:

“The January survey shows continued resilience with minimal fluctuations, with economic optimism remaining at a historically high level.

“A further decline in confidence was potentially prevented by the reduction in Covid infection rates from early January and the prospect of easing restrictions across the UK.

“However, businesses remain cautious in the face of the pandemic and are facing challenges from rising cost pressures, although many are raising prices in response.”