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Businesses in the North East tied with London as the most confident in the UK in January, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

North East companies reported higher confidence in their own business prospects month-on-month, up eight points to 65%. When taken alongside their optimism in the economy, up 17 points to 59%, this gives a headline confidence reading of 62% – 14 points higher than in December, and the joint highest reading alongside London (62%).

North East businesses identified their top target areas for growth in the next six months as entering new markets (50%), evolving their offering with new products or services (46%) and investing in their team (41%).

A net balance of 54% North East businesses expect to increase staff levels over the next year, up 23 points on last month.

The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.

Overall, UK business confidence rose nine points in January to 44% – its highest level since February 2022 and its strongest start to a year since 2016. Firms’ outlook on the overall UK economy rose ten points from 27% to 37%, while businesses’ optimism in their own trading prospects also climbed three points month-on-month to 51%.

Companies’ hiring intentions increased marginally, with 33% of firms intending to increase staff levels over the next 12 months, up four points on the month before.

The West Midlands (56%) and Yorkshire & the Humber (44%) followed the North East and London (62%) as the most confident overall regions in January.

The East of England (38% in January vs. 45% December) and Northern Ireland (29% vs. 36%) were the only two regions to reporting declining levels of confidence. The majority of the data was collected before the December ONS inflation data was announced on January 17th.

Three of the four sectors tracked in the Barometer reported rises in confidence. The most significant increase was in services which accelerated 15 points to 45%, up from December’s 16 point drop. Manufacturing confidence also increased to 49%, while construction rose eight points to a 10-month high of 45%. There was a more mixed picture in retail however, dipping three points to 41% with anecdotal evidence of weaker footfall and sales in December as shoppers hit the streets earlier than usual in November. Nevertheless, some companies still reported stronger sales over the festive period.

Martyn Kendrick, regional director for the North East at Lloyds Bank Commercial Banking said:

“This month’s data shows that North East firms are denying any January blues and kicking off 2024 with a bang, buoyed by stronger confidence in their own trading prospects and an improved economic outlook.

 

“There’s reason to be cheerful – this year will bring some major growth opportunities for the region’s businesses. This includes the ongoing development of the new North East Investment Zone, which has the potential to underpin thousands of jobs and further cement the region’s leadership in key areas like clean energy and green manufacturing, cascading benefits across the North East and its communities.

 

“Good working capital management must be part of any business’ plans over the months ahead. Tight control of cashflow will give firms the firepower they need to make investments quickly, and to weather any unexpected downturns in trading.”

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