North East business confidence has surged to a record 75% in July, up 21 points from June’s 54%, according to the latest Lloyds Business Barometer. Firms in the region are now significantly more optimistic about both their own trading prospects and the wider economy, with a separate Lloyds study revealing that more than half intend to increase capital investment over the next year.
Confidence Surge Driven by Trading and Economic Optimism
The Business Barometer, which has tracked business sentiment for decades, found that North East companies reported a substantial rise in confidence about their own trading outlook, climbing eight points to 80%. Optimism in the wider economy also soared by 34 points to 70% during the month.
Businesses attributed their improved economic outlook to better economic data or news (52%) and improving inflation or cost measures (44%). Confidence in their own trading, meanwhile, was fuelled by increased investment in capacity or technology (53%) and improved economic conditions (43%).
Half of North East Firms Plan to Expand Workforces
A net balance of 50% of businesses in the region said they expect to increase staff levels over the next 12 months – up four points on June’s figure. This points to a strengthening labour market as companies look to capitalise on growing demand.
Looking ahead, the survey identified the top growth targets for North East firms: technology, including AI and automation (55%); entering new markets (45%); and evolving their offering, such as launching new products or services (37%). These priorities reflect a forward-looking business community keen to embrace innovation and expansion.
Regional Confidence Outperforms National Average
North East business confidence now sits comfortably above the 12-month average of 58%, with July’s reading of 75% representing the highest figure recorded in the region. Nationally, UK business confidence rose five points in July to 49% – a four-month high – driven by increased optimism about the economy thanks to falling global energy prices, the Bank of England holding interest rates, and the announcement of an interim peace agreement in the Middle East at the time of the survey.
The regional outperformance underscores the North East’s growing economic momentum, with firms showing greater resilience and ambition than many other parts of the country.
Capital Investment Intentions Outstrip UK Average
The Business Barometer findings come shortly after a separate piece of Lloyds research, which suggests that more than half of North East firms plan to increase capital investment over the next year. That put the region above the 47% UK average, and on a similar level to London and the South East, with just 7% of firms expecting a decrease.
This investment appetite is particularly significant given the current economic climate, with businesses demonstrating a clear commitment to long-term growth despite ongoing geopolitical uncertainties.
Business Leaders Welcome Positive Signs
Martyn Kendrick, regional director for North East at Lloyds, said: “It is fantastic to see North East business confidence reach such a high, underlining the strength, ambition and resilience of firms across the region. Even more encouragingly, that optimism is being matched by clear plans for growth. Businesses are looking to invest in AI and automation, explore new markets and expand their teams over the year ahead.”
He added: “This record level of confidence reflects the real momentum building across the North East, and we will continue to support businesses as they invest, grow and seize the opportunities ahead.”
Funding and Productivity: The Path to Growth
Amanda Murphy, CEO for Lloyds Business and Commercial Banking, commented on the capital investment findings: “Despite heightened geopolitical uncertainty, it's encouraging to see businesses planning to increase their capital investment. Firms need the right conditions to invest - whether that’s investing in AI, new technology, upgrading equipment or expanding capacity. It’s interesting that, while many businesses have already secured funding for investment, a significant proportion have yet to deploy it.”
She continued: “Investment drives productivity, competitiveness, and long-term growth. Ensuring businesses have the confidence, funding and support to move forward will be critical. By helping firms unlock investment, we can support growth, boost productivity and strengthen the UK's economic outlook.”
Outlook for the North East Economy
The combination of soaring confidence, robust hiring intentions, and above-average capital investment plans paints a positive picture for the North East economy over the coming year. With businesses actively pursuing technological advancement and market expansion, the region appears well-positioned to benefit from the national economic recovery.
As firms begin to deploy the funding they have already secured, the impact on productivity and competitiveness could be substantial, providing a solid foundation for sustained growth in the months ahead.
