Business confidence in the North East was unchanged month-on-month, remaining at -5% in September, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the North East reported marginally higher confidence in their own business prospects month-on-month at -2%. hen taken alongside their views of the economy overall, this gives a headline confidence reading of -5%.

The Business Barometer questions 1,200 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 for goods and services negatively affected by coronavirus during September, but with the picture improving month-on-month. Encouragingly, the North East had the smallest proportion of businesses reporting a fall in demand of any region in the UK – 41% said demand was being negatively affected, compared to 56% the month before. Meanwhile, 9% experienced an increase in demand, up two points on August.

More than two fifths (42%) of North East firms surveyed said they aren’t currently using the Job Retention Scheme.

When asked about the impact of social distancing measures, almost two thirds (63%) of businesses said they could, in theory, operate at full capacity while remaining COVID-secure, although 24% said they couldn’t operate fully within the rules.

Of the 54% of businesses reporting disruption to their supply chain during September, 40% expect the situation to improve within six months, while just 3% expect it will take more than 12 months to return to normal levels.

Steve Harris, regional director for the North East at Lloyds Bank Commercial Banking, said: “While confidence is unchanged from August, there are small signs of encouragement as the region remains one of the least pessimistic in the UK, with the share of firms facing a drop in demand falling month-on-month. But local lockdown restrictions now add to the challenges facing firms as we step into an uncertain winter period.

“We’ll remain by the side of businesses across the North East as they look towards economic recovery and navigate what could be a challenging few months ahead.”

National overview

At national level, overall confidence increased three points month-on-month to -11%. The East Midlands, Wales and London each had the highest confidence at -4%. Meanwhile, optimism fell nine points month-on-month in the South West to -34%, making it the least confident UK region.

Of the four major industry sectors, the services sector recorded the highest increase of eight points to -10%, driven in particular by the hospitality and finance & business services. Manufacturing was the only major sector to experience a decline in confidence, falling by eleven points to -18%.

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “It is encouraging to see a fourth consecutive lift in confidence, reflecting improvements in trading prospects and economic optimism. However, with new lockdown restrictions being announced, the UK’s path to economic recovery is uncertain and it remains to be seen how the new measures will impact on business confidence.”