Business confidence in Wales rebounded in the first half of the year, according to the latest Business in Britain report from Lloyds Bank, based on data gathered after the snap election had been called.

The confidence index – an average of respondents’ expected sales, orders and profits over the next six months – increased to 34 per cent from January’s score of 15 per cent.

The Business in Britain report, now in its 25th year, gathers the views of more than 1,500 UK companies, predominantly small to medium sized businesses, and tracks the overall “balance” of opinion on a range of important performance and confidence measures, weighing up the percentage of firms that are positive in outlook against those that are negative.

Welsh firms are feeling more optimistic than any other area in the UK, with confidence rising 19 percentage points compared with the beginning of 2017.

Businesses in Scotland, while still positive, had the lowest score in the UK and was the only place in Britain that has experienced a fall in confidence since January.

Regional confidence index January 2017 June 2017 January to June change Wales 15% 34% +19 North East 22% 33% +11 South East 15% 28% +13 South West 17% 27% +10 North West 15% 26% +11 East Midlands 12% 24% +12 Yorkshire and the Humber 17% 23% +6 East of England 20% 22% +2 West Midlands 1% 22% +21 London 9% 20% +11 Scotland 21% 19% -2

The confidence index is an average of respondents’ expected sales, orders and profits over the next six months. It calculates the ‘net balance’ – the difference the percentage of firms that are positive in outlook against those that are negative. It can vary between -100 if all firms are negative and 100 if all firms are positive, 0 is neutral.

Allan Griffiths, regional director for Lloyds Bank Commercial Banking, said:

“Confidence in Wales has increased significantly since our last survey in January, and is even higher than it was last September, when it was the only region whose confidence did not fall following the EU referendum. “The fact that this has happened despite the potential uncertainty from the snap general election, is another positive sign for underlying confidence across the country.”

Recruitment difficulties emerge

Overall, the share of Welsh firms naming political uncertainty and weaker UK demand as potential threats fell slightly, down from eight per cent and 20 per cent to six per cent and 11 per cent respectively six months ago.

The proportion of businesses in Wales that said they had experienced difficulty in recruiting skilled labour in the last six months, however, increased to 32 per cent compared with 27 per cent in January.

The net balance of firms expecting average pay to rise in the next six months also dropped slightly to 14 per cent from 16 per cent suggesting companies are taking a cautious approach to hiring and pay.

Allan added:

“Despite hurdles in recruiting skilled labour, Welsh businesses also anticipate sales, profits, and staffing levels to rise. “The outlook for the external environment remains mixed, with details of Britain’s exit from the EU still to come but businesses have been working within those parameters for a while now. For the moment, businesses in Wales are taking this in their stride until there is a clearer sense of what it will mean for them in the short and medium term.”

Improved outlook for export prospects

Welsh companies were more positive about export prospects. The net balance of firms in the region expecting higher total exports in the next six months rose to 25 per cent from -14 per cent. They were most upbeat about export prospects to North America (30 per cent), followed by the Middle East and Asia Pacific and Europe.

Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: