North East businesses are feeling the summer slump, but don’t count them out yet! While confidence has dipped, firms are already strategizing for growth, from embracing AI to conquering new markets. What’s driving this resilience, and what does it mean for the regional economy?

Despite a discernible dip in summer sentiment, businesses across the North East region are demonstrating remarkable resilience and a clear strategic focus on future growth initiatives.

Latest research from Lloyds Business Barometer reveals that overall confidence among North East firms experienced an 18-point decline in August, settling at 55%. This adjustment brings regional sentiment more closely in line with the national average, which saw a modest two-point increase to 54% during the same period.

The observed fall in confidence was primarily shaped by a nine-point reduction in firms’ optimism regarding their own prospects, bringing it to 68%. Concurrently, a more significant 26-point drop was noted in confidence concerning the wider economy, which now stands at 43%, contributing to the headline reading of 55% compared to July’s 73%.

However, beneath this cautious *economic outlook*, North East companies are proactively outlining ambitious growth targets for the next six months. A substantial 48% intend to introduce new technologies, including artificial intelligence and automation, demonstrating a strong push towards *technology adoption*. Furthermore, 42% are keen to break into *new markets*, while 37% plan *workforce investment* through enhanced training programs.

Nationally, the *business confidence* landscape presented a mixed picture, with manufacturing companies experiencing a robust 14-point rise to 62% and retailers enjoying a 13-point boost to 57%. Conversely, the construction sector recorded a five-point fall to 40%, and service sector operators saw an eight-point decline to 53%.

Martyn Kendrick, regional director for the North East at Lloyds, emphasized this inherent strength, noting that North East firms remain more positive than the national average. He highlighted the ongoing commitment to strategic *business growth*, whether through technological advancements or crucial investments in human capital, signaling a forward-looking approach.

Adding a layer of concern, a separate survey from the Confederation of British Industry (CBI) painted a “grim picture” for the service sector in the quarter to August. This report underscored mounting cost pressures, slowly rising average selling prices, declining profitability, and weak demand, leading to calls for governmental short-term certainty to boost confidence.

Hann-Ju Ho, senior economist at Lloyds Commercial Banking, offered a nuanced perspective, suggesting that while the wider UK economy experiences a modest cooling of confidence, firms remain optimistic about their own trading prospects. This focus on controllable growth opportunities, such as new market entry and *technology adoption*, underpins the region’s strategy despite broader economic uncertainties.