Confidence among Welsh private business owners has fallen sharply, with just 61% now optimistic about growth prospects for the second half of 2026, according to KPMG's half-year private enterprise barometer. This represents a significant decline from the 89% recorded at the start of the year, reflecting the impact of global economic instability, persistent inflation, and trade uncertainties.
National and regional confidence trends
Across the UK as a whole, business confidence has also dipped but to a lesser extent, falling from 87% to 80%. The data underscores the unique pressures facing Welsh firms, which have seen a 28 percentage point drop in confidence over six months, compared to a 7 point drop nationally.
KPMG’s report highlights that despite the downturn, technology remains a top investment priority for Welsh businesses. More than half (55%) are focusing on areas such as artificial intelligence (AI), cyber security, and broader digital transformation. Diversification is also high on the agenda, with 54% of businesses looking to expand service offerings and broaden their client base. However, this is down from 57% at the start of 2026 and nine percentage points below the national average.
Funding strategies shift towards internal resources
Welsh businesses are showing a growing preference for internal funding over external investment. Almost half (49%) plan to use their own balance sheets to finance growth, reflecting a desire to retain control amid economic uncertainty. Interest in private equity has waned, with 40% of respondents considering it as a funding source, down from 47% five months ago and five points below the UK average of 45%.
Cost pressures remain a primary concern. Nearly half (48%) of Welsh businesses identified inflation and ongoing cost pressures as the biggest short-term risks. Firms are also looking to policymakers for support, with more than two-fifths (43%) wanting the upcoming autumn Budget to prioritise growth-focused investment and a clear industrial strategy.
Political landscape and expert commentary
The May 2026 Senedd election marked a significant political shift in Wales, contributing to some business hesitation. David Williams, KPMG UK's office senior partner for Wales and the south west of England, commented: “This dip in Welsh business confidence during the first half of 2026 reflects a combination of persistent cost pressures, global uncertainty and political change closer to home. However, the headline figure doesn’t tell the whole story, and there remain clear signs of ambition among Welsh businesses.
“The Senedd election in May marked a significant change in Wales’s political landscape. A period of transition can naturally lead some businesses to pause while they wait for greater clarity around future priorities. Certainty and consistency, as the new administration’s plans take shape, should help businesses plan and invest with more confidence.”
Williams added that the increased appetite for technology investment is encouraging, noting: “This reflects both the strength of Wales’s technology ecosystem and the determination of Welsh businesses to use innovation to improve productivity and pursue growth.”
