OVER the last six months, the Lloyds Bank Business Barometer has tracked the confidence of the North East’s firms; charting a surge in optimism at the start of the year following December’s general election and the UK’s departure from the EU, followed by a plunge in outlook as the region grappled with the onset of lockdown.

Lloyds Bank’s data is now showing early signs that confidence is slowly returning to the North East, after the Covid-19 outbreak shut down swathes of the region’s economy – with hospitality, tourism and manufacturing particularly hard hit.

Paul Varley, regional director for the North East at Lloyds Bank, looks at the challenges and opportunities to help businesses get back up and running.

He says: "Every month, the Lloyds Bank Business Barometer measures confidence within the North East business community, providing insight into how local firms feel about their trading prospects and the strength of the economy, along with their plans for the months ahead.

"This year has already brought exceptional change and new pressures, and the Barometer has charted it all.

"The region began 2020 with a positive outlook. Overall confidence – a reflection of firms’ optimism within their own business prospects taken with their views on the economy – climbed in the first three months of the year, likely buoyed by relative political stability.

"However, this soon changed with the onset of the coronavirus pandemic.

"Between March and April, as lockdown measures impacted swathes of the region’s economy, hitting tourism and hospitality sectors particularly badly, the Barometer reported a record 62-point drop in confidence to -39 per cent.

"And while there have since been signs that pessimism may slowly be easing, the picture is mixed and overall confidence remains firmly in negative territory.

"June’s Business Barometer came in at -23 per cent, three points lower than in May.

"Firms continue to face significant headwinds with low demand reported in the North East just one example. More broadly, the economy will need to address Covid-linked unemployment.

"Any path forward will need to help drive long-term growth while supporting jobs.

"In recent months, calls have been growing for a ‘green recovery’ – a process that will help to re-ignite the economy by focusing investment in areas that support the transition towards a low carbon future.

"The benefits are clear. Multiple studies have shown that green recovery strategies would be just as, or more, effective in delivering economic benefits compared to regular fiscal stimulus.

"A recent McKinsey paper reported on research that found $10m (£8m) could create 77 jobs when invested in energy efficiency or 75 jobs when invested in renewable technology, but just 27 jobs when invested in fossil fuels.

"A green focus would also help maintain progress towards the UK’s carbon reduction goals – goals that we at Lloyds Bank are working to help meet through our aim of reducing the carbon emissions we finance by more than 50 per cent by 2030.

"The North East has strengths that make it perfectly positioned to both contribute to, and benefit from, a sustainability-focused approach to recovery.

"In recent years, our region has drawn on its manufacturing heritage, deep-water ports, skills base – bolstered by strong university links – and dedicated research facilities like the Offshore Renewable Energy Catapult to emerge as a national leader in offshore power generation and renewable energy technology.

"In these areas, exciting projects are already underway. In May, it was announced that the Port of Tyne would become home to a new operations and maintenance base for the world’s biggest offshore wind farm at Dogger Bank.

"And plans have been set out for ‘Net Zero Teesside’ – an initiative that will use carbon capture and storage technology to create the UK’s first zero-carbon industrial cluster, creating at least 7,000 jobs in the process.

"On top of its energy expertise, the North East also has a growing reputation in electric vehicle manufacturing – another area that could help drive economic growth as the green agenda accelerates.

"As the production base for the Nissan LEAF, the region is already home to a sizeable and well-developed electric vehicle supply chain. Meanwhile, Newcastle University is currently leading a network of four research centres working to help the UK capitalise on the economic opportunities of a shift to electric machines, including vehicles.

"Building on progress in areas like these will play a major role in supporting economic growth and creating new jobs as we look to emerge from the coronavirus. And businesses across many sectors can carve out a role to play – from opportunities within the offshore wind supply chain to construction companies working to build green infrastructure projects or retrofit housing stock.

The months ahead will bring new challenges but there will also be opportunities for growth. At Lloyds Bank, we’ll continue to stand by the side of North East firms to help them navigate the path to recovery."