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How Business Has Changed in the North East in 2025 – And What’s Likely to Change in 2026

Dave Stopher

The North East of England has undergone a quiet but profound business transformation in 2025. While national headlines have often focused on London, the Midlands, and the South East, the North East has been steadily reshaping its economic identity — moving from historic industrial heartland to a modern hub for clean energy, advanced manufacturing, electric vehicles, and digitally driven SMEs.

As the region enters 2026, many of the long-term strategies announced in previous years are now translating into real jobs, real infrastructure, and real commercial opportunities. This article explores how business has changed across the North East in 2025, what those changes mean for companies on the ground, and what is most likely to define the regional economy in 2026.

Business in the North East in 2025: A Year of Transition and Delivery

Devolution and regional leadership reshaped economic direction

One of the most significant structural changes in 2025 has been the growing influence of regional decision-making through the North East Mayoral Combined Authority.

After several years of planning and consultation, 2025 marked the point where devolution began to affect businesses directly, rather than simply existing as a political framework.

Key impacts included:

For businesses, this meant improved access to support, clearer routes into public funding, and better alignment between skills provision and employer demand.

Clean energy became the North East’s defining growth sector

If one sector dominated business growth narratives in 2025, it was clean energy and net-zero industry.

The North East strengthened its position as a national hub for:

The region’s industrial coastline, deep-water ports, and available brownfield land made it particularly attractive for large-scale clean-energy projects. In 2025, the shift was noticeable: less talk, more delivery.

Developments linked to the Teesside Freeport continued to shape supply chains, encouraging manufacturers, logistics firms, and engineering specialists to locate or expand in the area. For local SMEs, this created new opportunities to enter long-term, contract-based supply relationships rather than relying on short-term project work.

Automotive and EV manufacturing moved into a new phase

Few business stories better illustrate the North East’s evolution than automotive manufacturing in Sunderland.

In 2025, Nissan continued its transformation of the Sunderland plant into a flagship electric-vehicle production facility. This was not simply an upgrade — it represented a shift toward a fully integrated EV ecosystem.

At the same time, battery manufacturer AESC advanced plans for expanded gigafactory capacity in the region. While global EV demand softened in some markets during 2025, the North East remained strategically important for long-term electrification plans.

What changed for business in 2025:

Rather than depending on one employer, the region started building an interconnected manufacturing ecosystem — a crucial distinction for long-term economic resilience.

SMEs faced pressure — but adapted faster than ever

While major investments made headlines, small and medium-sized enterprises formed the backbone of the North East economy in 2025.

Challenges were real:

Yet many North East businesses responded with rapid adaptation, particularly through technology.

By the end of 2025, SMEs across the region were:

For many, AI was no longer experimental — it became part of everyday business operations, particularly for firms with limited staff but growing demand.

What Will Change in the North East in 2026: Key Predictions

1. From announcements to outcomes

If 2025 was about transition, 2026 is likely to be about proof.

Expect a noticeable shift in how success is measured:

Battery manufacturing, EV supply chains, and renewable-energy infrastructure are all expected to reach critical delivery milestones, providing tangible evidence of the region’s transformation.

2. Skills shortages will become the biggest constraint

As industrial and energy projects scale, skills availability is likely to become the North East’s biggest economic challenge in 2026.

High-demand roles will include:

The response is expected to be more employer-led than in the past, with:

Businesses that invest early in workforce development are likely to outperform competitors struggling to recruit.

3. Business support will become more targeted and data-driven

By 2026, regional business funding is expected to become more selective but more effective.

Rather than broad grants, support is likely to focus on:

This reflects a wider move toward measurable outcomes, where funding success is judged by long-term economic impact rather than short-term survival.

4. AI will become standard business infrastructure

In 2026, AI will no longer be a differentiator — it will be expected.

North East firms are likely to embed AI into:

The competitive advantage will come from how well businesses integrate AI into workflows, not simply whether they use it.

5. Risks that could shape the year ahead

Despite strong momentum, several risks could influence business confidence in 2026:

How regional leaders respond to these challenges will play a critical role in sustaining growth.

Conclusion: A Region Moving from Promise to Performance

By the end of 2025, the North East had clearly entered a new economic chapter. The region is no longer defined by decline or transition alone, but by delivery, specialisation, and long-term strategy.

As 2026 approaches, the North East stands at a pivotal moment:

The next year will not be about vision — it will be about execution. For businesses willing to adapt, invest in skills, and align with the region’s strengths, the North East in 2026 offers one of the UK’s most compelling growth stories.

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