Chamber survey reveals challenging outlook for region’s businesses
Date published:
The results of our latest Quarterly Economic Survey (QES) reveal a challenging outlook for the region’s businesses, with rising concerns about costs and workforce issues offsetting some positive developments.
- Labour costs continue to dominate as the leading price pressure, affecting 76.3% of respondents, an increase of 7.4% from Q3 2024.
- Energy prices remain a significant concern, cited by 52% of businesses.
- UK sales have dropped by 13.2% compared to last quarter, reflecting a 25.3% decline over the past year.
- Export activity has also declined, with 32.5% of respondents involved in international trade, down 4.1% from Q3 2024.
- Businesses operating at full capacity fell by 5% this quarter, continuing an annual decline.
The Chamber’s survey – the largest independent business survey of its kind in the UK – captures the sentiment of the North East business community.
The quarter 4 2024 results highlight that while some indicators, such as energy efficiency measures and part-time recruitment, show resilience, the overall picture remains complex.
Rhiannon Bearne, executive director of policy and representation and deputy CEO at the Chamber, said: “For our members and stakeholders in the North East, this quarter’s findings arrive during a new year in which they are being presented with a number of economic pressures, including increases to national insurance contributions.
“While some businesses report positive momentum in areas such as recruitment, concerns around staff costs, taxation and energy prices are increasingly prominent.”
Price Pressures
Labour costs have emerged as the dominant pressure across sectors, with manufacturers (87%) and service providers (71.9%) most affected. Despite a 2.3% year-on-year decline, the 7.4% quarterly increase underscores persistent issues. Other significant pressures include raw materials (65.2% for manufacturers) and other overheads (64.2% for service providers).
Over the past 12 months, there has been a mixed picture of price pressures, with notable declines in finance costs (-10.6%) and fuel (-11%), but an increase in other overheads (+6.9%).
Workforce and Recruitment
Labour market challenges have intensified, with 76.9% of businesses highlighting staff costs as a major concern, a 27.8% increase from Q3 2024. Businesses are increasingly seeking part-time (+5.9%) and temporary staff (+1.7%), while demand for full-time staff has declined by 5.1%. Recruitment difficulties remain, particularly for skilled manual and technical positions (63.6% for manufacturers) and professional roles (47.2% for service providers).
Sales and Exports
Domestic market activity has slowed, with UK sales and orders decreasing by 13.2% and 5.3% respectively this quarter. Over the past year, these declines have been even more pronounced, with UK sales down 25.3% and orders falling by 17.2%.
Exporting activity has also decreased, with a 4.1% quarterly drop and a 2.5% year-on-year decline. Manufacturers (78.3%) remain the primary exporters, compared to 14% of service providers.
Rhiannon said: “The continued decline in reported levels of UK sales and exports underscores some of the fragility of current trading conditions.
“These insights make it clear that our work – amplifying the voice of the region’s businesses and advocating for change at all levels of government – remains more crucial than ever.”
Business Investment
Investment intentions have taken a hit, with plans for plant investments down 23.3% this quarter and 26.4% compared to last year. Training investment has also seen a sharp decline, dropping 24.9% quarterly and 22.6% year-on-year. These figures reflect caution among businesses amid ongoing uncertainty.
Energy Usage
Energy concerns persist, with 52% of respondents identifying it as a key issue. To mitigate costs, 76.3% of businesses have implemented energy-saving measures. These include staff behaviour changes (82%), reducing equipment usage (82%), and investing in energy-efficient equipment (53%). However, fewer businesses are exploring local energy generation solutions, with a 9% quarterly decline in measures such as solar panel installation.
Advocacy and Support
As businesses face continued economic headwinds, the Chamber remains committed to advocating for the North East. By highlighting these survey findings to policymakers, the Chamber aims to ensure the region’s challenges and opportunities are front and centre in shaping the UK’s economic agenda.
Natasha McDonough, Chamber vice president, said: “This quarter’s survey comes at a critical juncture for the North East business community, with the results indicating both resilience and concern. While businesses are taking proactive steps to address energy efficiency and staff recruitment, the October Budget has added a layer of complexity for businesses, showing concerns around taxation and operational costs.
“These policy changes are set against a backdrop of continued inflationary pressures and challenging trading conditions, as evidenced by the Q4 data.”
Natasha added: “The Chamber remains committed to advocating for the policies and support systems businesses need to thrive. Together, we will navigate these challenges and work toward a brighter future for our region.”
View our quarter 4 2024 QES report here.