The North East has seen business activity fall for first time in 14 months after seeing a steep drop amid economic uncertainty, a new survey suggests.
The latest NatWest Growth Tracker data has revealed a renewed contraction in activity, amid a sharp decrease in demand triggered by increased global economic uncertainty – particularly related to President Trump’s US tariff announcements – which is significantly affecting a number of regions.
The headline North East Growth Tracker Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – fell from 51.4 in March to 48.1 in April, a drop which comes as a result of reduced client activity and overall caution towards spending.
Firms who took part in the survey linked the decrease to economic uncertainty and weaker demand conditions, and the downturn was broadly similar to that seen at the national level.
The survey was conducted after US tariff announcements on April 2, which, at the time, saw minimum tariff rates of 10% applied to imports into the US, as well as higher ‘reciprocal’ tariff rates on a number of countries. A subsequent announcement a week later saw a 90-day pause on most higher tariff rates.
Sebastian Burnside, chief economist at NatWest, said: “The tracker this month reflects the challenges that economic uncertainty can create for Ƶ businesses of all scales. Firms across the Ƶ reported a challenging start to the second quarter, with demand for goods and services falling in all areas amid a backdrop of economic uncertainty and rising prices. The North East saw similar reductions in both demand and activity to those recorded at the national level.
“It’s encouraging that firms are still looking to the future with some optimism, although growth expectations are lower than they have typically been in the past.
“Rising labour costs have added to pressure on businesses, following April’s increases in National Insurance contributions and minimum wages. As firms look to mitigate rising costs, we’ve seen average prices charged for goods and services increase at faster rates, as well as a greater focus on workforces. Labour markets in all areas of the Ƶ have felt the impact to some degree in recent months, with only Scotland avoiding a fall in employment in April. Moreover, the North East saw the slowest reduction in employment numbers of the remaining 11 Ƶ areas.
“We cannot ignore the backdrop during which this survey was carried out but regardless, as we’ve seen in the past and as the South West and Scotland illustrate, Ƶ business is resilient and can always offer reasons for optimism throughout.”
