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Business & Economy

North East’s business confidence dips following July high

Business confidence in the North East dipped slightly during August after rising to be the most confident region in the UK during July. Confidence in the region fell two points in August to -5 per cent, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the North East reported lower confidence in their business prospects month-on-month at -3 per cent when taken alongside their views of the economy overall, this gives a headline confidence reading of -5 per cent.

The Business Barometer questions 1200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.

When asked about the impact COVID-19 was having on their business, the majority of firms continued to see demand negatively affected during August. 55 per cent experienced a fall in demand for their products and services, down two points on the month before. Meanwhile, 7 per cent experienced an increase in demand, down four points on July.

Almost two fifths (39 per cent) of North East firms surveyed said they weren’t currently using the Job Retention Scheme.

When asked about social distancing measures, more than half (59 per cent) of businesses said they could, in theory, operate at full capacity while remaining COVID-secure, although more than a quarter (27 per cent) said they couldn’t operate fully within the rules.

Of the 52 per cent of businesses reporting disruption to their supply chain during August, 48 per cent expected the situation to improve within six months, while just 4 per cent expected it would take more than 12 months to return to normal levels.

Paul Varley, regional director for the North East at Lloyds Bank Commercial Banking, said: “The North East is one of the most confident regions in the UK, second only to the South East. But the caveat remains that we’re still in a period of historic lows in optimism.

“Nevertheless, despite this month’s marginal dip, it’s encouraging to see confidence largely returning to the region after being absent since before the lockdown in March. We’ll continue to be by the side of businesses across the North East as they look towards economic recovery.”