Business confidence in the North East has remained unchanged month-on-month at 48% - the highest in the UK.

The stats from the latest Business Barometer from Lloyds Bank Commercial Banking are due to firms in the North East reporting higher confidence in their own business prospects month-on-month, up six points at 57%. When taken alongside their optimism in the economy, down four points to 42%, this gives a headline confidence reading of 48%.

North East businesses identified their top target areas for growth in the next six months as evolving their offer (52%), investing in their team (38%) and entering new markets (29%).

Martyn Kendrick, regional director for the North East at Lloyds Bank Commercial Banking, said:  “The economic landscape is a challenging one for businesses, but the North East has shown real resilience this year. The unchanged confidence levels this month coupled with plans to increase investment in teams through training and new hires is reflective of how growth is on the agenda for local firms.

 

We’ll continue to be by the side of firms across the region as we work towards a year of growth.

 

“Larger companies like Nissan have also shown their confidence in the region, recently announcing plans to triple its investment in electric vehicle production. That’s why it’s encouraging to see local firms planning future investment in upskilling employees which will prepare them to capitalise on the expected inward investment, as well as new growth opportunities within their own organisations.

“We’ll continue to be by the side of firms across the region as we work towards a year of growth.”

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

A net balance of 31% of businesses in the region expect to increase staff levels over the next year, up six points on last month.

Overall, UK business confidence fell two points in December to 35%, the first decrease since August, driven largely by firms’ outlook on the overall UK economy which dipped by eleven points from 38% to 27%. Businesses’ optimism in their own trading prospects also decreased, but less markedly so – by five points to 43%. Companies’ hiring intentions also dropped slightly with 29% of firms intending to increase staff levels over the next 12 months, down six points month-on-month.

Firms in West and East Midlands were the only regions to report an increase in confidence, up one point to 33% and up five points to 34% respectively. While the North East was most confident, the East of England (45%), London (38%) and the South West (36%) followed closely behind.

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Firms in the services industry reported a significant decrease in confidence, down 16 points to 30%, due to moderation in both trading prospects and economic optimism. Manufacturing confidence also eased back (38%, down seven points). However, retail and construction both bucked the trend with rises to 44% (up two points) and 37% (up two points) respectively.

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “This December data was collected following several key announcements, including energy prices rises and the UK economic outlook being revised down in the Autumn Statement. All of this will undoubtedly have had an impact on business confidence as we head into 2024.

“Businesses are also balancing cost pressures with a challenging labour market that will see increases to minimum wage in April 2024, as perhaps indicated in the wage growth figures, at a time when they are managing staff retention and recruitment decisions.

“However, over the course of the year confidence has steadily increased from an average confidence of 25% in the first three-months of 2023 and ending the year with a three month average of 39% - an indication of the positive trajectory business has seen this year. This provides a healthier position to begin 2024 with, compared to 2023.”