BUSINESS confidence in the North-East fell three points during June to -23 per cent, but remained above the UK average of -30 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 month-on-month at -13 per cent. When taken alongside their views on the economy overall, this gives a headline confidence reading of -23 per cent.

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

When asked about the impact of coronavirus on their business, one third (33 per cent) said they expect to be operating at more than 50 per cent of capacity by the end of June, though almost a fifth (18 per cent) didn’t expect to be operating at all.

Four in ten (41 per cent) expect to be operating at pre-Covid-19 levels within three months, although 11 per cent expect it to take more than 12 months.

The majority of firms continued to see demand negatively affected during June, with the picture worsening month-on-month.

Almost three quarters (70 per cent) experienced a fall in demand for their products and services, up seven points on May.

Meanwhile, eight per cent experienced an increase in demand, up three points on the month before

Of the 69 per cent of businesses reporting disruption to their supply chain during June, almost a quarter (23 per cent) expected the situation to improve within three months, while only two per cent expected it would take more than 12 months.

Paul Varley, regional director for the North-East at Lloyds Bank Commercial Banking, said: “North-East businesses continue to face significant pressures, and many are still grappling with reduced demand.

“The reopening of retail in June, followed by hospitality in July, are each big steps forward that should buoy confidence in the coming weeks.

“We’ll continue to be by the side of businesses to help ensure they’re on the strongest possible footing on the road ahead to recovery.”

Across the UK, business confidence grew marginally month-on-month, rising three points to -30 per cent. The West Midlands was the least pessimistic region at -18 per cent, followed by Yorkshire and the Humber and the North-East at -23 per cent. Scotland was the most pessimistic, with confidence dropping eight points month-on-month to -41 per cent.

In June, the construction sector rebounded strongly, increasing 30 percentage points to -14 per cent. The retail sector increased two points to -23 per cent and manufacturing saw an improvement at -35 per cent. These were the highest levels seen since March, however, other services fell to -36 per cent, largely reflecting the impact on the hospitality and education sectors.

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “While the results suggest the economy may be starting to see some improvement, trading conditions remain difficult for most firms as the majority are still experiencing disruption to supply chains. Hopefully the recent Government announcement of further relaxation of restrictions and the slight easing of social distancing measures will enable more businesses to reach their capacity and resume their usual activities, which we would expect to be reflected in further improvements to optimism next month.”