The Business Barometer from Lloyds Bank points to signs of a turnaround in the region’s economy
The Newcastle skyline, viewed looking across from Gateshead towards the Tyne Bridge and the Glasshouse(Image: Newcastle Chronicle)
Business confidence in the North East rose significantly in February amid growing signs of a turnaround in the region’s economy.
The latest Business Barometer from Lloyds Banks suggests that companies in the region are reporting higher confidence in their own business prospects, as well as the wider UK economy. That saw overall confidence levels increase 15 percentage points to 55%, while a majority of businesses (57%) said they expect to increase staff levels over the next year. That finding was up 13 points on last month.
Looking ahead to the next six months, North East businesses identified their top target areas for growth as investing in their team or evolving their offering, either by introducing new products and services or entering new markets. The North East outperformed other areas of the country and scored well above national confidence levels of 44%.
The construction sector saw the strongest gains in overall confidence nationally, while manufacturing also saw a boost. But confidence for retail and service sector firms softened slightly, down two and three points respectively.
Martyn Kendrick, regional director for the North East at Lloyds, said: “It’s encouraging to see a rise in North East business confidence, with firms in the region feeling more positive about their own trading prospects as well as the economy itself.
“It’s particularly good to see hiring and training so high on many firms’ agendas. This month, it was announced that a new MTC Training advanced manufacturing training centre was coming to Tyneside, which will play a major role in strengthening the region’s capability in a key local sector. This centre is an initiative that we’re backing, and just one of the ways we’ll be offering our support to North East businesses, of all sizes and sectors, as they continue to grow.”
Last week a separate survey suggested that growth in the UK’s private sector had gained further momentum this month, as manufacturers were boosted by the biggest surge in export orders since 2021. But the S&P Global flash UK composite purchasing managers’ index (PMI), which is watched closely by economists, also pointed to continuing job losses. Unemployment recently reached a 10-year high in the North East.
Hann-Ju Ho, senior economist at Lloyds Commercial Banking, said: “It’s encouraging to see optimism in the wider economy returning, although with a small reduction in firms’ confidence in their own trading prospects. The majority of the survey results were collected following the Bank of England’s close decision to hold interest rates at its February meeting, signalling potential easing ahead, which may have alleviated business concerns, including those around cost pressures.
“While the rise in pricing expectations to a six-month high may indicate firms are looking to rebuild their margins in 2026. It’s also great to see confidence increase for manufacturers and construction firms as they are key for UK growth.”