Sales, exports, investment and cashflow are nearly all now in negative territory as a number of economic headwinds impact North East firms, says the North East England Chamber of Commerce’s economic survey this morning.

Over 90% of businesses said that inflation and energy prices are of significant concern, with staff costs and staff shortages not far behind. Confidence around cash flow is also down – to -14 points overall for all companies responding, worse than the same time last year when it stood at -9.9 points.

However the survey also shows businesses are taking positive action to deal with the impact of energy price rises.

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Andrew Haigh, Chamber President (Newcastle Building Society) said: “This quarter we asked specific questions about energy costs and shone a spotlight on some of the positive steps firms are taking to reduce costs and consumption.

“The results showed businesses are using this as an opportunity to go green by using local energy generation methods such as solar panels. That resilience and creativity will be powerful as businesses deal with the challenging economic conditions ahead.”

A high proportion of respondents (72%) said they were reducing energy usage by turning off equipment and 38% of firms were investing in new, more energy-efficient equipment. Andrew Haigh said: “One of the strengths of our survey is that it can highlight the important differences in experiences and perceptions of services and manufacturing firms.

Future profits


“This quarter we can see that a little more sharply with manufacturing businesses feeling more neutral on the question of future profitability, compared to the service sectors’ relative optimism.”

Durham University Business School is the associate sponsor of the survey, and Christos Tsinopoulos from the School said: “The second Economic Survey paints a picture which reflects the worries and concerns of the recent months. Perhaps not surprisingly, the main issue is the inflationary pressure, which is driven by the increased cost of energy. This has been a shock to many and probably something that we were not prepared for.

“The additional questions that have been added in the survey help provide some great insights into how the increase in the cost of energy affects business activity. The results do show that the higher cost of operating has made some reconsider investment decisions and at times has generated some short term cashflow problems.

State of the art research


“This is a concern because investment at the local and business level can improve productivity, innovation, and competitiveness. Yet, all is not bad. The region is still home to a host of leading academic institutions that conduct state of the art research and educate leaders.

“At Durham University Business School, we have noticed a significant increase in the interest for executive education programmes. This demand provides robust evidence of the desire of businesses to invest in their employees.

“Although the survey shows a moderate reduction of the budgets allocated for the training, the long term trend for more training is robust.



Furthermore, it is evident from the survey that businesses do not stand still. In addition to encouraging energy saving behaviours, e.g. by making the most of online communication technologies and reducing the use of private cars, there is a very notable increased in the use of renewable energy generation. The insights provided by this survey are thus, overall, encouraging.

“They indicate a dynamic set of businesses that are resilient, creative, and ambitious. Thank you to everyone and particularly our partners at the North East England Chamber of Commerce for working hard to make this happen."