Businesses' confidence 'dips but has not hit pause'

By the Editorial Team · Friday, August 28, 2026

Business confidence in the North East of England dropped sharply in August, with firms’ optimism about their own trading prospects falling 24 points and broader economic confidence declining 37 points. Despite this decline, many businesses are still investing in technology, developing new products, and planning workforce expansion, suggesting ongoing efforts to adapt and grow amid regional economic challenges.

Business confidence in the North East region of England experienced a notable decline in August, according to recent survey data. The Lloyds Business Barometer, which collects monthly insights from firms across the UK, showed that confidence among North East companies in their own trading prospects dropped by 24 percentage points from July to 56%. Optimism regarding the wider economy in the region fell even more sharply, down 37 points to 33%.

The combined effect of these measures produced a headline business confidence rating of 45% in August, significantly lower than the 75% recorded in July and below the region’s 12-month average of 56%. The survey data were collected between August 3 and August 17, a period during which new figures revealed unexpected economic growth for the UK in the three months ending June.

Despite the fall in confidence, businesses in the North East highlighted several positive factors influencing their outlook. Improved customer demand was cited by 57% of respondents, while 55% pointed to increased investment in technology as a driver of optimism. Additionally, 71% of firms attributed some confidence in the general economy to rising market demand. The survey also found that companies are focusing on growth through investing in staff, developing new products or services, and entering new markets. Nearly one-third of businesses in the region expect to expand their workforce within the coming year, although this represents a decrease from last month's hiring intentions.

Martyn Kendrick, regional director for the North East at Lloyds, noted that although confidence has dipped, businesses have not stalled. He emphasized that firms remain more positive about their own trading prospects than the broader economic environment and continue to take practical steps to strengthen their positions through investment and market development.

In contrast to the regional downturn, overall business confidence across the UK showed improvement in August. The national confidence index rose four points to 53%, marking its highest level since the onset of the Iran conflict earlier in the year and exceeding the 12-month average of 47%. Optimism about the broader economy was a significant contributor, increasing by 18 points since June. Firms’ outlook on their own trading conditions also improved slightly to 58%, a three-month high and above the 12-month standard of 56%. The survey indicated that 66% of UK businesses anticipate increased output over the next year, while 8% expect a decline.

Amanda Murphy, CEO of Lloyds Business and Commercial Banking, described the national trend as encouraging, highlighting the second consecutive month of rising business confidence and stronger demand. She noted that although challenges persist, easing cost pressures and fewer firms planning to raise prices could enable more companies to focus on growth and investment in the near term.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.