The latest Lloyds Business Barometer reveals that North East business confidence has grown in the first half of 2026, with firms demonstrating considerable resilience despite a challenging economic backdrop. Confidence in the region started the year at 40% in January, climbed to a six-month high of 69% in May, and settled at 54% in June. The region ended the first half of 2026 in a stronger position than it started, with an average year-to-date confidence figure of 53%.
Regional Performance Above National Average
During the first half of the year, the North East has consistently performed at or above the UK average. National rates stood at 44% in both January and June. Across the UK's regions and nations, the North East recorded one of the strongest improvements in confidence over the period, alongside Yorkshire, the South West, the South East, and the East Midlands.
The Business Barometer findings come from a survey of 1,200 UK firms across all regions and sectors, which help to explain what's driving that confidence. The research found that 85% of North East businesses believe they are resilient enough to withstand economic shocks, while 72% expect to grow this year despite continued uncertainty. Meanwhile, 56% of firms have been impacted by recent global volatility, with supply chain disruption cited by 60% and rising costs affecting 37%.
Strategic Adjustments by Businesses
Almost two-thirds (64%) of North East businesses have adjusted their business strategy in response to challenges. Among them, 42% introduced cost-saving measures, 44% increased inventory levels, and 47% locked in commodity, raw material, or input prices where possible. Martyn Kendrick, regional director for the North East at Lloyds, commented: “The first half of 2026 has shown the resilience and adaptability that continues to define the North East business community. Confidence has climbed 14 points since January, and firms across the region have consistently outperformed the UK average throughout the half.”
Kendrick added: “When you talk to business leaders across the North East right now, what stands out isn't panic – it's how deliberately they're responding to uncertainty. They're locking in costs where they can, building inventory strategically, and taking the kind of decisive action that protects their operations because they recognise that uncertainty in global supply chains and energy markets is likely to persist, even as conditions evolve.”
Sector-Specific Resilience
In sectors central to the North East economy, such as manufacturing, logistics, food production, and the region's growing offshore energy and renewables base, business leaders are making fundamental decisions about how to build resilience into their models for the long term. Kendrick noted: “They recognise that global supply chain challenges and energy market volatility are structural issues, not temporary blips, and they're acting accordingly. This isn't a defensive crouch – it's a foundation for growth.”
The proactive approach is mirrored by the way regional businesses are managing their finances. Around 86% of firms say they have the right financial tools and support to navigate volatility, with digital banking tools such as automated payments and real-time cash visibility (49%), cashflow forecasting (33%), and interest rate hedging (27%) among the most widely used.
Financial Tools and Support
Kendrick emphasised the importance of financial clarity: “Financial clarity matters enormously in an environment like this. When businesses can see their cashflow clearly, they can make decisions about locking in costs from a position of strength rather than fear. When they have working capital flexibility, they can build inventory strategically rather than desperately.”
He added: “That's why we've committed £35bn in new finance this year for companies operating and investing in the UK, with £9.5bn of that dedicated to SMEs. Resilience isn't just about protecting what you have – it's about positioning yourself to grow when opportunities arise, and that's exactly what North East businesses are doing.”
