Improving North East Economy
Evidence of improving North East economy as confidence beats regional peers. Two separate studies on sentiment among businesses and insolvency-related data point to things getting better in the region.
There are indicators the North East economy may be improving as confidence among business owners rose this month and insolvencies reached a 16-month low.
While firms across the region reported lower confidence in their own prospects in June, down six points to 37%, their attitude towards the economy was buoyed up with a 21 point rise to 56%. The research, as part of the Lloyds Bank Commercial Banking Business Barometer, showed the North East’s was only marginally behind Yorkshire & Humber in the sentiment stakes with a headline confidence reading of 47%.
The findings came in contrast to the national picture which showed overall UK confidence fell nine points to 41%. Researchers said that was above the long term average of 28%, and in line with levels seen during Q1 2024 before a sharp rise in May.
Over the next six months, North East firms pointed to their key focusses as the introduction of new products or services (55%); investment in people, including training (45%) and the introduction of new technology (34%). Nationally, the construction, retail and services sectors all showed declines while manufacturing bucked the trend with a two point boost to 51%
Martyn Kendrick, regional director for the North East at Lloyds Bank Commercial Banking, said: “Many North East firms will currently be looking at how they can position their firms to make the most of new growth opportunities ahead. Good working capital management will be critical here.
“Done well, this can unlock funds from within firms’ operations, which they can then invest in their businesses. We’ll be by the side of the region’s businesses to support them as they work towards their growth ambitions.”
Separate analysis showed 60 cases of insolvency-related activity across the region in May. The activity, which includes administrator and liquidator appointments and creditors’ meetings, was the lowest since January 2023, when 59 cases were recorded.
The research from insolvency and restructuring trade body R3 showed activity fell by 7.7% in May 2024 when compared to April, and by 21.1% compared to May last year. It put the North East alongside East Anglia as the only two regions across the UK that saw both a monthly and yearly fall in the numbers.
Kelly Jordan, chair of R3 in the North East, said that while the economy is improving it is important for businesses worried about their finances to seek help early. She said: “Cases of insolvency-related activity in the North East have fallen every month since February – a welcome trend after a tough few years for businesses in the region and across the UK. Inflationary pressures are easing, and the cost of raw materials and energy prices on the decline which all indicate that the economy is stabilising.
“While it’s too soon to say we’re past the cost-of-living crisis, it’s clear that many businesses in the North East are now in a more positive position and are feeling more confident going into the second half of this year.”