Business confidence is improving in the North East as factors holding companies back over the last year begin to ease, an influential survey has said.
The quarterly economic report from the North East England Chamber of Commerce suggests more organisations are preparing to create jobs and are expecting inflation to stabilise. Concerns around recruitment and cashflow remain, however, and there has been a warning recent months have put massive strains on many firms.
Investment in training and equipment has fallen as businesses struggle with cashflow and only 41% of firms in the region are working at full capacity, the survey says. Costs remain a key issue for many business with almost three-quarters of firms taking part in the survey (71.3%) remaining concerned about energy prices.
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Concerns about general inflation also remain high, the Chamber said, but have fallen considerably in the last quarter and over the year.
Chamber president Andrew Haigh, also chief executive of Newcastle Building Society, said: “Concerns across all indicators in our first survey of 2023 have eased and forecasts suggest the UK economy will avoid a technical recession this year. This provides a welcome opportunity to reflect on how resilient, resourceful and innovative businesses in our region were throughout a year of uncertainty.
“Business confidence in the North East has begun to rise and it is vital as a business community we seize this as an opportunity for growth.”
The last few days have seen a mix of signals for businesses in the region, with official figures showing near-record lows of unemployment but inflation remaining stubbornly above 10%. In a separate report, business leaders from the North East indicated a return to confidence - but at levels which remain fragile and point to ongoing economic uncertainty.
The Business Confidence Monitor for the North East of England from the Institute of Chartered Accountants in England and Wales saw the North East recording the second highest level of business confidence in the UK.
James Callaghan, ICAEW regional director for the North East, said: “I am pleased to see business confidence in the North East has turned positive gain, pulling off an impressive and welcome reversal from last year’s downward spiral. However, companies across the region have told us such a sea change does not mean their trials have subsided, even if some of them have at least eased slightly - at least for the time being.
“Concerns remain over future sales, skills shortages, high inflation and the current tax burden. Plus, with almost 70% of businesses in the region operating below capacity, it’s not surprising firms remain cautious.”
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