North East business activity stays in growth but global events weigh on confidence

The latest NatWest Growth Tracker show a slowing of growth from private sector firms

Business activity in the North East remained in growth last month but slowed as global events weighed on confidence, a new report suggests.

The latest Growth Tracker data from NatWest showed a slowdown in activity growth in the North East private sector in March, with the slowest rate this year and companies highlighting softer sales growth.

Respondents to the survey reported higher prices and lower demand, in part due to the war in the Middle East.

Cost pressures surged to the highest since the start of 2023, the survey suggests, and business confidence fell. The headline North East Growth Tracker Business Activity Index, which measures change in the region’s manufacturing and service sectors, fell from 53.8 in February to 50.4 in March, indicating only a slight increase in business activity. The expansion in the North East was broadly in line with that seen in the UK as a whole.

Malcolm Buchanan, chair of the NatWest North Regional Board, said: “The North East private sector economy closed the first quarter of 2026 on uneven footing.

“The region registered only a fractional increase in business activity, following the trend seen at the UK level, with panel members often linking the moderation in growth to a steep jump in cost pressures, largely related to energy price rises following the outbreak of war in the Middle East.

“In fact, the rate of input cost inflation surged to the highest since January 2023, which pushed firms to raise selling prices to the greatest extent in just under three years as businesses looked to protect profit margins.

“At the same time, the pace of growth in new business slowed to a crawl during March, with some companies stating that fading client confidence had weighed on sales.

“That said, evidence of demand resilience encouraged firms to raise employment levels.

“Concurrently, business optimism regarding the year-ahead outlook softened from February’s recent high, and was the least pronounced since August 2025.

“While growth was expected to be boosted by new product launches, private sector businesses in the North East cited concerns regarding the health of the domestic economy and the wider impact of the war in the Middle East.”

Despite the more challenging business environment, the North East saw a slight improvement in staffing levels. It was one of only three increases seen out of the 12 monitored UK regions and nations, with only Northern Ireland and Scotland also seeing job creation.

The growth tracker has been released ahead of a week of key economic data being released. Next week sees the publication of monthly unemployment and inflation figures.