Business confidence in North East decreases in first half of 2018

Business confidence in the North East has fallen by 12 points in the first half of the year but remains in line with the national average at 25%, according to the Business in Britain report from Lloyds Bank.

As well as the decrease in confidence from 38% to 25%, fewer firms are also planning to recruit new staff or increase investment.

The net balance of firms looking to grow investment in the next six months fell by three points to 18%, compared with January, while the net balance of businesses looking to hire more staff fell by six points to 8%.

However, the share of firms that reported difficulties hiring skilled labour fell 13 points to 39% while the number expecting to increase pay rose by 12 points to 30%.

The Business in Britain report gathers the views of more than 1,500 UK companies, predominantly small to medium-sized businesses, and tracks a range of performance and confidence measures, weighing up the percentage of firms that are positive in outlook against those that are negative.

Kelly Green, regional director for the North East, said: “There is no doubt that businesses are facing challenges at the moment, with Brexit uncertainty and concerns over global demand highest among them. As a result, confidence has fallen in the first half of this year.

“But the fact that confidence remains in line with the national average, and is the highest among all the Northern Powerhouse regions, suggests firms are resilient and becoming more comfortable operating in the current uncertainty.

“While investment and recruitment plans have not fallen as much, firms must still make sure that they are not missing out on the opportunities being created amid the current turbulence.”

Uncertainty surrounding Brexit is now the single greatest risk to firms in the North East in the next six months, cited by 22% of firms.

More than 31% of businesses in the North East expect a negative impact on their business if no trade agreement is reached with the EU. Only 20% expect a positive impact, while 44% either do not expect any impact or said they didn’t know.

Elsewhere, 12% of firms say weaker global demand is their greatest risk in the next six months, followed by weaker UK demand, which was cited by 9%.