Business confidence in the North East fell 30 points during August to 45%, according to the latest Business Barometer from Lloyds.

Companies in the North East reported lower confidence in their own trading outlook month-on-month, down 24 points at 56%. When taken alongside their optimism in the economy, down 37 points to 33%, this gives a headline confidence reading of 45% (vs. 75% in July 2026).

North East firms’ confidence in their own trading outlook was driven by stronger customer demand (57%) and increased investment in technology (55%), while confidence in the economy was driven by rising market demand (71%).

A net balance of 30% of businesses in the region also expect to increase staff levels over the next year, down 20 points on last month.

Business confidence in the North East now sits below the 12-month average of 56%, with its highest figure of 75% in July 2026.

Looking ahead to the next six months, North East businesses identified their top target areas for growth as investing in their team (55%), evolving their offering (52%), by introducing new products or services, and entering new markets (51%).

The Business Barometer, which surveys 1,200 businesses monthly and which has been running since 2002, provides early signals about UK economic trends both regionally and nationwide.

Martyn Kendrick, Regional Director for North East at Lloyds, said: “While we have seen confidence dip this month, it’s encouraging to see that North East businesses haven’t hit pause, and are remaining notably more positive about their own trading outlook than the wider economy.

“Economic optimism may have softened, but businesses across the region are backing themselves to grow with many already taking practical steps to strengthen their position, from investing in technology to exploring new markets. We’ll continue to support North East businesses as they invest, adapt and plan for the future.”

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Overall, UK business confidence increased four points in August to 53%, the highest reading since the start of the Middle East conflict in March (55%) and above the 12-month average of 47%.

This was driven by a second month-on-month increase in economic optimism, up 18 points since June.

Optimism in the wider economy rose seven points to 49%, compared to a 12-month average of 37%. Of those surveyed, 64% said they were optimistic (up five points from July) in the wider economy, while those who felt pessimistic decreased by two points to 15%. The main factors cited by firms who felt more positive included stronger customer demand and improving financial conditions.

Businesses’ own trading outlook improved two points to a three-month high of 58% in August, compared to a 12-month average of 56%. Sixty-six percent of firms (up one point from July) expect an increase in output over the year ahead, while those expecting a decrease in activity reduced by one point to 8%. Among firms expecting stronger activity, the main factors were stronger customer demand, increased investment in capacity or tech and improved supply chain conditions.

Amanda Murphy, CEO Lloyds Business and Commercial Banking, said: “It's encouraging to see business confidence rise for the second month in a row, reaching its highest level since March.

"While international firms remain more confident, it’s good to see domestic companies register a strong month-on-month increase.

"Overall, businesses are reporting stronger customer demand, greater optimism about the wider economy and growing confidence in their own trading outlook, all of which will be helping to support investment and growth plans.

"While businesses continue to operate in a challenging environment, easing cost pressures and fewer firms expecting to raise prices in the coming year, should allow them to focus less on managing headwinds and more on pursuing growth."