Chartered accountancy membership body the ICAEW has published its latest Welsh business confidence monitor
Director in Wales of ICAEW Robert Lloyd Griffiths..
Business confidence in Wales has declined into negative territory amid record high tax worries and pre-Budget uncertainty, according to a survey of business leaders. Sentiment in Wales in final quarter of 2025 stood at minus 7.8 on ICAEW’s business confidence monitor (BCM) index, down sharply from plus 0.9 in the previous quarter.
Though above the UK average in the quarter (minus 11.1), confidence in Wales remains well below the historical norm (plus 2.8).
A record 69% of Welsh firms cited the tax burden as a growing challenge, above the national average of 64%. This likely reflects the financial pressures associated with April’s tax changes, including higher National Insurance contributions and the impact of pre-Budget speculation.
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Regulation also remained a concern for many businesses, with 60% reporting it as a growing issue. Meanwhile, nearly a quarter of companies (23%) highlighted government support as a challenge, its highest level since early 2024. The findings underline the need for further support and relief to help Welsh businesses manage rising costs and maintain competitiveness, ICAEW said.
However, the ICAEW added that the outlook is not without encouraging signs. Despite modest growth in domestic sales and exports this year, 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%).
Robert Lloyd Griffiths, ICAEW director, Wales, said: “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.
“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.
“As we look ahead, creating an environment that supports investment, reduces complexity and enables growth will be vital. 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.”
Despite the positive outlook for exports, profits growth in Wales is expected to slow to 1.% over the next 12 months, the lowest rate in the UK.
Employment growth also remained subdued, rising by just 0.1% in Q4 – the slowest expansion of any UK nation or region. Staffing levels are expected to improve next year, with growth of 0.6%, though this remains below both the historical average for Wales (1.2%) and the UK-wide projection (1.3%).
Salary growth increased to 3.3% in Q4, despite softer employment demand. Wage growth is expected to moderate to 2.4% over the next year, slightly below the UK average