BUSINESS confidence in the North-East fell seven points during July to seven per cent, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the North-East reported lower confidence in their business prospects, which fell nine points to nine per cent, and lower economic optimism, down five points to four per cent. Together, this gives an overall confidence of seven per cent.

Businesses’ hiring intentions showed a net balance of four per cent of businesses in the region expected to hire more staff during the next year, down 15 points on last month.

Across the UK, overall confidence stood steady at 13 per cent as firms’ confidence in their own prospects slipped three points to 19 per cent, while their economic optimism remained at five per cent.

The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.

Kelly Green, regional director for the North-East at Lloyds Bank Commercial Banking, said: “Despite this dip in confidence, firms that we speak to across the region are still looking to ensure they’re able to capitalise on any new opportunities ahead.

“We’re by their side with advice on how to develop their growth plans, and have committed up to £700m in funding to North-East firms this year alone to support key investments in their businesses.”

Across the region, a net balance of 12 per cent of businesses said they felt that the UK’s exit from the European Union was having a negative impact on their expectations for business activity, down three points on a month ago.

Businesses in the South West were the most confident, at 29 per cent, ahead of the East Midlands (26 per cent) and West Midlands (19 per cent).

Those in Scotland were the least confident, with an overall confidence of zero per cent, 13 points below the national average.

Sector snapshot

Manufacturing was the most upbeat sector, with overall confidence rising nine points to 19 per cent and overtaking retail, which fell five points to 17 per cent. Overall confidence among services businesses was unchanged at 12 per cent, but construction dropped 11 points to six, the sector’s lowest reading in more than 18 months.

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “It is promising to see national confidence levels continuing to beat the dip seen in February despite business confidence remaining below the long-term average and overall business confidence remaining unchanged this month.

“Coupled with this, employment expectations still remain largely unchanged from last month, with only one-third of firms planning to increase their staff levels, compared with more than 40 per cent of firms last year, suggesting cautious business behaviour in the current economic environment.”