Business confidence in North East proves ‘resilient' amid decreasing economic optimism
The North East has seen business confidence drop by one point during July to 34% as firms’ optimism in the UK economy falls, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the North East report an increased confidence in their own business prospects at 48%, up 19 points on last month, but lower economic optimism at 20%, down 21 points.
Together, this gives an overall confidence of 34%, which remains above the national average of 30% and is just one point below last month’s figure of 35%.
However, the drop in economic optimism has also hit recruitment plans, with a net balance of 21% of businesses in the region now expecting to hire more staff during the next year, compared with 32% a month ago.
Nationally, overall confidence rose one point on June as firms’ optimism about the economy climbed two points to 25%. Businesses’ confidence in their own business prospects was held at 34%.
The Business Barometer questions 1,200 businesses every month and provides early signals about UK economic trends both regionally and nationwide.
Steve Harris, regional director for the North East at Lloyds Bank Commercial Banking, said: “Although it’s disappointing to see firms’ optimism in the economy fall this month, their overall confidence has proved resilient and the North East remains above the national average.
“What’s encouraging is that firms across the region are significantly more secure in their own business prospects, even as their confidence in the wider economy wavers. I look forward to seeing local businesses capitalise on this upswing in sentiment, making targeted investments for growth as we enter the second half of the year.”
Across the region, a net balance of 9% of businesses said they felt that the UK’s exit from the European Union was having a positive impact on their expectations for business activity, down six points on a month ago.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, added: “The fact that economic optimism rose across the UK as a whole this month illustrates a slightly more positive view on the balance of risks for the country’s economy, despite the expected interest rate rise this year.
“It will be interesting to see if the overall business confidence measure shifts from its steady position towards the end of the year.”