Businesses across the North East of England are expressing a renewed, though delicate, sense of optimism as key cost pressures begin to subside, according to the latest research from the region's leading business group.
Survey Points to Easing Pressures and Rising UK Orders
The North East Chamber of Commerce's Quarterly Economic Survey for the final three months of 2025 indicates a notable shift in sentiment. Company leaders reported that falling prices for essentials and an increase in orders from within the UK are helping to bolster confidence for the coming months.
Specific concerns over inflation, staff costs, and energy prices all declined during the quarter. This has provided tangible relief on daily operational pressures. The survey's headline findings confirmed a drop in the costs associated with labour, fuel, and utilities.
However, the picture is not uniformly positive. Researchers described the uptick in confidence as "fragile," pointing to mixed signals in other critical areas. Worries about crime, traffic congestion, and bureaucratic red tape all increased. Furthermore, while more firms were exporting compared to the previous quarter, overall export levels have not yet returned to those seen last year.
Manufacturers and Services Voice Top Concerns
The survey highlighted differing priorities across sectors. Manufacturing businesses identified taxation and inflation as their primary concerns. In the service sector, taxation was also cited as the number one issue.
On activity, the results were varied. The number of firms operating at full capacity was down both for the quarter and year-on-year. Encouragingly, there were signs of renewed willingness to invest, with intentions to purchase new plant machinery and invest in staff training both on the rise.
Workforce data showed a cautious picture. Current employment levels rose by 6.5% during Q4 2025, but remain 7.1% below the same period last year. Expectations for future hiring dipped slightly, and recruitment activity softened.
Leadership Warns Fragile Recovery Needs Sustained Support
Deborah Walton, President of the North East Chamber of Commerce, said the findings reflect a "growing sense of relief" after a prolonged difficult period. "Falling concerns around inflation, staff costs and energy prices are easing day-to-day pressures, allowing firms to plan with greater confidence, supported by rising sales and renewed investment," she stated.
She was quick to add a note of caution, emphasising that the recovery is not yet secure. "Many businesses are still hesitant to expand their workforce, capacity constraints persist in key sectors, and export activity has not fully recovered," Ms Walton explained. "Targeted, practical support will be essential to turn this cautious optimism into long-term resilience for the North East economy."
Rhiannon Bearne, the Chamber's Deputy Chief Executive, echoed this sentiment. She noted the "more encouraging picture" created by easing costs and stronger UK sales, but highlighted ongoing uncertainties. "Businesses need certainty on costs, regulation and investment support if this emerging stability is to be sustained," Ms Bearne concluded.
