Business confidence in Wales is down for the first time since the first quarter of 2011, according to a leading report.
In the fourth quarter of 2011, the Business Confidence Index, compiled by The Institute of Chartered Accountants in England and Wales (ICAEW), fell from 16.5 to -9.2 according to the findings of the survey of 66 senior business professionals in Wales.
But there was some good news with capital investment recovering in Wales over the last year, although that may be short-lived, according to business leaders.
David Lermon, ICAEW director for Wales, said: “Business confidence in Wales grew in the last two quarters but it has now fallen back into negative territory. The impact of the Euro crisis, rising unemployment and public sector cuts are clearly having an impact and there are clearly concerns about the economic future and the possibility of a double dip recession.
“Consumer confidence is low and with energy, food and fuel prices biting hard business confidence is being affected as we head into 2012, which looks as if it could be another difficult year for many businesses in Wales.”
Geraint Davies, Partner at Grant Thornton, which compiled the survey on behalf of ICAEW, said: “Despite the slump in overall confidence in Wales, private sector employment is holding up and competition is easing as the worst-hit businesses have closed.
“The big challenge, however, will be getting the private sector to start absorbing the coming losses in public sector jobs.”
The crux of this article is the last paragraph; Wales has become heavily dependent on public sector jobs. A lot of these jobs will soon go, the private sector is in no condition to offer employment for these people and, even if it were, the culture shock of life in a cut throat commercial world may not suit many ex-public sector workers.
One ray of hope is that the UK did not join the Euro. If Wales had an independent government I am pretty sure we would have been a Euro zone member by now. This would have placed Wales in a financial position similar to Greece and we would have had Germany dictating who governs Wales.