Business confidence in the North East fell during March in line with most of the UK, according to a new survey.
The Business Barometer from Lloyds Bank Commercial Banking, which surveys about 1,200 businesses monthly, put overall confidence at 36% with cost inflation and the war in Ukraine both weighing on the sentiment of the regions firms.
Companies reported lower confidence in their own prospects month-on-month at 33%, and were also less confident about the economy at 39%.
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Despite the downbeat headline outlook, North East businesses reported plans to target growth in the next six months, identifying opportunities in investment (38%), diversifying into new markets (37%) and introduction new products or services (26%).
Intentions to increase staff levels over the next year were down 10 points on last month at 43%.
Overall UK business confidence dropped during March, from 44% to 33% as the war in Ukraine appeared to have had the greatest impact on manufacturing and retail firms - with both sectors showing drops in confidence of 19%.
The service sector dropped by six points to 32% while construction dropped eight points to 43%, but remained higher than at the start of the year.
Steve Harris, regional director for the North East at Lloyds Bank Commercial Banking, said: “Firms in the North East are experiencing a challenging time, as Russia’s invasion of Ukraine and surging costs continue to affect businesses. The region’s manufacturing and construction firms in particular have been hit hard and will need to be supported through the coming months to help them maintain their recovery from the pandemic.
“It’s encouraging, however, that firms have still been able to identify opportunities for future growth, and we will remain by their side to help them overcome the current headwinds and achieve their ambitions.”
