Market Update: Regional business leaders confident about trading despite fears over wider economy – Full Analysis

Lloyds has published its latest Business Barometer, to examine how confident leaders are in their own companies and the wider economy.

Broken down by North West, North East and Scotland, it provides a mixed picture across our region.

In the North West business confidence rose 9 points to 48% in January. In Scotland it was up 1 point to 37%, while in the North East, it fell 7 points to 40%.

These figures are calculated by deducting the percentage of negative responses from the percentage of positive responses from 1200 firms.

Trading prospects, meanwhile, were fairly similar in the North East (55%) and Scotland (53%), but in the North West it rocketed 19 points, to 70%.

Optimism in the economy, however, has fallen month on month.

• North East – 26%
• Scotland – 21%
• North West – 26%

In Scotland a net balance of 42% of businesses expected to increase staff levels over the next year, up one point on last month. 

They identified the top targets for growth as:

• investing in their team, for example training (53%); 
• evolving their offering (36%) 
• and investing in sustainability (34%). 

“It’s great to see businesses in Scotland remain confident. What’s especially positive is that more Scottish firms than anywhere else in the UK are planning to invest in sustainability from decarbonising their operations to making their products and services more sustainable,” said Martyn Kendrick, Scotland director at Bank of Scotland Commercial Banking. 

“This is an important step as Scotland works towards its net zero target by 2045.”

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In the North East, 44% expected to increase staff levels (up 2 points), with areas for growth identified as:

• entering new markets (46%)
• evolving their offering (46%)
• investing in sustainability (35%).

“While overall confidence in the North East eased in January, it’s encouraging to see businesses feeling more positive about their own trading prospects and continuing to plan for growth,” continued Kendrick, who is also Regional Director for the North East at Lloyds.

“This month’s data shows that many firms are looking ahead by entering new markets, evolving their products and services, and investing in sustainable growth. As always, we’ll continue to support businesses across the region access the finance they need to take advantage of new opportunities in the months ahead.”

A similar staffing picture arises in the North West, with 45% of businesses expecting to employ more staff, which is up 5 points on the previous month.

Here, firms said their key areas for growth were:

“It’s great to see North West businesses starting the year with real optimism and feeling positive about their own trading prospects in the coming months,” explained Jenny France, Area Director in the North West at Lloyds.

“This month’s data shows that firms have ambitious plans for 2026, whether that’s developing new services or investing in technology, and we’ll be there to support them as they pursue their growth ambitions.” 

Overall, UK business confidence fell three points in January to 44%.  

While firms’ confidence in their own trading prospects rose seven points to 59%, their optimism in the wider economy fell 14 points to 28%.  

The survey was compiled from 1200 businesses nationwide, including 144 in the North West, 58 in the North East and 77 in Scotland.