Nearly three quarters of UK companies believe that doing business will be more competitive in 2008, according to research from Barclays Commercial Bank.

But, while the research found that the market environment would be challenging this year, overall owner managers are confident of their ability to manage external threats to their business such as the economic environment and market competition.

Two thirds (66 per cent) are quite confident in their risk management capabilities and one in five (21 per cent) are very confident.

This follows the publication of analysis by the Financial Times into the economic outlook for businesses across the UK.

The paper found that "the outlook from the regions is not as gloomy as the national picture has appeared".

John Union, Barclays Commercial Director for Wales, said: "It's unsurprising that businesses are pointing to 2008 as a year when competition will be tough. However, I believe that for Welsh businesses, prospects of economic growth are still reasonable. The local economy has really gained momentum in recent years - with improving employment prospects a key indicator.

"Public services continue to be an important and expanding sector, with the advent of self-government providing additional impetus to growth. Diversification does remain a challenge for the region, however, with financial services for example still making a relatively small contribution to the Welsh economy.

"It important to remember that Welsh firms are still focused on exploiting opportunities for growth. From our experience, businesses are well accustomed to dealing with growing competition and now is absolutely the time for companies to be planning how they will tackle this issue over the year ahead."

Looking at the year ahead, John Union offers businesses in Wales the following advice on how to thrive in the face of growing competition: "Plan, plan and plan some more.

Understanding both the challenges and the opportunities will help your business to stay on track.

"Regularly assess the state of the market. Understanding what competitors are up to, looking at regional trends and also the wider economic picture will help to ensure that you can respond quickly to external competition.

"Make sure that you really are maximising the return on any investment. Whether you plan on investing in people and skills, products innovation or marketing, undertake rigorous ROI studies to ensure you get bang for your buck'.

"Take proactive steps to improve your risk resilience. For example, if you are trading abroad, or reliant on key commodities, consider taking out some form of protection - for example hedging - against price fluctuations.

"Whether it's streamlining internal processes or restructuring debt, there may be more scope than you realise for making cost savings."