Business confidence in the North East fell in December though firms are more upbeat about their own prospects than they are about the general economy, a new survey suggests.
The latest Business Barometer from Lloyds Bank - which has been released as official revised figures showed that the Ƶ economy had no growth in the third quarter of the year - found that firms’ optimism in their own trading prospects fell three points to 47%, while optimism in the economy dipped 23 points to 25%.
There was some cause for optimism as 40% of businesses in the region expect to increase staff levels over the next year, up four points on last month. Companies identified investment in their teams and introducing new products or services as their top priorities for the months ahead.
The Business Barometer, which surveys 1,200 businesses monthly and which has been running since 2002, provides early signals about Ƶ economic trends both regionally and nationwide. Overall Ƶ business confidence fell two points in December to 39%, although remained above the long-term average of 29%.
Martyn Kendrick, regional director of the North East at Lloyds, said: “While business confidence in the North East has dipped this month, it’s encouraging to see firms remaining committed to growth, with many focused on investing in their workforce and developing new products and services. As we kick off the new year, we look forward to continuing to work by the side of local businesses to support their growth plans.”
Hann-Ju Ho, senior economist at Lloyds Commercial Banking, said: “In the last few months overall confidence has fallen incrementally, and in December the trend continued as it fell by 2 points to 39%. While there hasn’t been any significant one-month change, confidence has gradually drifted from the summer’s highs.”
The survey has been released as revised figures from the Office for National Statistics showed that the Ƶ economy flatlined in the third quarter of the year. Ƶ gross domestic product (GDP) showed no growth between July and September, in the run up to the Autumn budget.
The downbeat economic readings provide a blow to Chancellor Rachel Reeves and the Government’s hopes to grow the economy rapidly and come as a separate survey by business group the Confederation of British Industry (CBI) found firms expected to reduce both output and hiring. The Chancellor’s hike to employers’ national insurance, set to bring in around £25bn a year, was highlighted as one of the reasons for the gloomy outlook.
Alpesh Paleja, the CBI’s interim deputy chief economist, said: “There is little festive cheer in our latest surveys, which suggest that the economy is headed for the worst of all worlds – firms expect to reduce both output and hiring, and price growth expectations are getting firmer. Businesses continue to cite the impact of measures announced in the Budget – particularly the rise in employer NICs – exacerbating an already tepid demand environment.
“As we head into 2025, firms are looking to the Government to boost confidence and to give them a reason to invest, whether that’s long overdue moves to reform the apprenticeship levy, supporting the health of the workforce through increased occupational health incentives or a reform of business rates.”
Chancellor Rachel Reeves said: “The challenge we face to fix our economy and properly fund our public finances after 15 years of neglect is huge. But this is only fuelling our fire to deliver for working people.”
