North East Business Confidence Falls In April, But Remains Above UK Average

Business confidence in the North East fell 10 points during April to 46%, but the region’s firms were still the third most confident in the UK, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the North East reported lower confidence in their own business prospects month-on-month, down 11 points at 56%. When taken alongside their optimism in the economy, down nine points to 37%, this gives a headline confidence reading of 46% (vs. 56% in March).

North East businesses identified their top target areas for growth in the next six months as investing in their team, including hiring new staff and investing in training (44%), entering new markets (42%) and evolving their offering with new products and services (34%).

A net balance of 43% of businesses in the region also expect to increase staff levels over the next year, down 16 points on last month.

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

National picture

Overall UK business confidence held steady at 42% in April, the same level as recorded in March and February.

While firms’ confidence in their own prospects dipped marginally by four points to 45%, their confidence in the economy rose by four points to 39%. Meanwhile, the net balance of companies planning to increase staff levels over the coming 12 months climbed six points to 33%.

The East of England was the most confident UK nation or region in April (56%), followed by the Wales (51%) and the North East.

Sector Insights

Businesses in the manufacturing sector reported increased confidence this month, recording an increased score of 45% (up 4 points) which is the highest level for 3 months. Similarly, confidence among firms in the services sector (42%) and construction (41%) also improved, largely driven by greater economic optimism.

In retail, confidence pulled back slightly from last month’s strong showing to 40%, illustrating that confidence in this sector remains fragile. Retail is also more liable to be impacted by external factors sectors other sectors do not face into, such as the poor weather.

Martyn Kendrick

While its disappointing to see business confidence fall in the North East, the region’s firms are still the third most confident in the UK and have a lot to look forward to. Take the recent plans submitted by Britishvolt. If approved, the manufacturer’s new Northumberland site could trigger £10bn of investment for the local area and create thousands of jobs.

It’s also encouraging to see that more firms in the North East are planning to enter new markets. This is an effective growth strategy and the conversations we’re having with local businesses show they are increasingly exploring opportunities at home, across the UK, and internationally.

We will continue to be by the side of businesses across the North East as they overcome challenges and seek new opportunities for growth.

Hann-Ju Ho

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said:

“We are beginning to see a consistent trend emerge from our Barometer results in recent months. Businesses are feeling increasingly confident about the economy, coinciding with falling inflation and hopes that interest rates will start to fall this year.

“There continues to be a mixed picture among the regions, with the biggest rises seen in Wales and the South West. The strongest confidence was reported in the East of England, with confidence rising for the third consecutive month. Confidence in the North East eased slightly but remained strong in April.

“The second quarter of 2024 has started brightly for businesses, and we are seeing firms expressing greater confidence in an enduring economic recovery.”