Business confidence in Wales has improved despite the UK’s slip into a double dip recession, according to a survey by the Institute of Chartered Accounts for England and Wales (ICAEW).
In the second quarter of 2012, the ICAEW’s Business Confidence Index increased from -9.2 to 5.7, according to the findings of the survey of 70 senior business professionals in Wales. It is the highest the Index has been since the third quarter of 2011.
The latest results were released on the day Michael Izza, Chief Executive of ICAEW, was in Wales meeting Edwina Hart, the Minister for Business, Enterprise, Technology and Science and Finance Minister Jane Hutt.
David Lermon, ICAEW director for Wales, said: “While it is pleasing business confidence in Wales is improving, there is no doubt that many businesses are still finding that customer demand remains very challenging.
“The BCM suggests that economic recovery is still very fragile and many businesses will face a difficult second half of 2012.”
Geraint Davies, Partner at Grant Thornton in Cardiff said: “The fact that 60% of businesses in the UK are operating below capacity suggests that wage pressure will remain minimal going forward. Despite the bounce back in confidence in Wales, the latest uncertainty over the Euro is bound to make matters more difficult.”
The key findings of the latest Wales BCM are:
- Despite rising confidence, market conditions for firms in Wales are a key concern. Almost six in ten businesses (58%) report finding competition in their marketplace more of a challenge now than 12 months ago. In addition, over half of firms in Wales (55%) are finding the level of customer demand to be more challenging now than they did a year ago.
- The latest Bank of England Credit Conditions survey showed that the availability of corporate credit fell in the UK in Q1 2012 and is expected to become scarcer still in Q2. In line with these findings, access to capital is becoming a more prevalent concern. More than one in four firms in Wales (27%) cite this as a greater challenge now than a year ago, following an upward trend from 15% in the fourth quarter of 2011.
- Firms in Wales report their exports have grown by 2.7% year on year in Q2 2012. This latest result follows a general downward trend over the previous six quarters, from a high of 6.5% annual exports growth in Q4 2010. With more than two fifths of goods exports (42%) from Wales going to the EU, export growth remains at risk from reduced demand and ongoing weak economic conditions on the continent. Despite this, firms in Wales expect export growth over the coming 12 months to remain relatively firm, anticipating annual growth of 4.8% over the next year.