Employment Rights Bill shapes outlook as North East businesses remain cautious
Date published:
Economic survey results released today (20 October) by the North East Chamber of Commerce reveal that business confidence across the region remains fragile, with many businesses focusing on managing immediate pressures rather than pursuing growth.
The latest Quarterly Economic Survey (QES) shows weaker workforce performance, subdued investment and rising concerns over inflation and taxation. While cost pressures are beginning to ease, optimism is being tempered by new policy developments, notably the forthcoming Employment Rights Bill.
Headline findings:
- Workforce indicators weakened, with current workforce levels down 17.6% this quarter and 21.3% year-on-year
- Plant and training investment fell sharply, down 20.2% and 11.4% respectively
- Price pressures eased across most categories, particularly labour costs (-5%) and raw materials (-8.2%), but also utilities (-3.2%) and overheads (-1.5%)
- Inflation (+14.9%) and taxation (+5.2%) were the fastest-rising business concerns this quarter
- On the Employment Rights Bill, sentiment was mixed, with c14% of businesses in favour, c41% neutral, while c45% expressed concern about potential costs and compliance burdens
Policy and business sentiment
With the Employment Rights Bill due to return to Parliament later this month, the Chamber used this quarter’s survey to gather members’ views on this important piece of forthcoming legislation.
While many welcome its aims to modernise employment practices, businesses are concerned about the cost and complexity of compliance, underscoring the need for clarity, consultation and proportionate implementation.
Rhiannon Bearne, deputy chief executive at the Chamber, said, “This quarter’s results show a business landscape still under pressure. Some costs have eased, but businesses continue to face weaker workforce performance, subdued investment and rising concerns over inflation and taxation.
“The Employment Rights Bill is a significant development, and businesses broadly welcome its objectives. However, they also want clarity, consultation and proportionate implementation to ensure it works in practice.”
Economic context
Stability, confidence and targeted support remain priorities as businesses look to sustain growth and invest in the longer term.
These results also align with the Chamber’s recent Autumn Budget submission, calling for no new taxes on business, and for practical measures that help unlock regional growth and long-term investment.
Price pressures
Price pressures continued to ease, with notable falls in labour costs (-5%), raw materials (-8.2%) and utilities (-3.2%), though fuel costs rose slightly (+1.3%).
Year-on-year, inflationary pressures remain elevated, particularly in labour costs (+3.3%) and overheads (+2.5%). Manufacturers remain most affected by raw material prices, while service providers are most concerned about labour costs.
Workforce and recruitment
Workforce indicators weakened, with current workforce levels down 17.6% this quarter and 21.3% year-on-year. Hiring intentions also softened, particularly for permanent and full-time roles.
Recruitment difficulties increased for professional, managerial and semi-skilled positions, while future workforce expectations showed only a modest improvement, reflecting continued caution among employers.
Sales and investment
Sales and investment remained subdued. Domestic sales declined 1.2% and UK orders fell 10.2%, indicating lower demand. Export activity rose slightly but remains down 10.8% year-on-year.
Investment intentions weakened further, with plant investment down 20.2% and training investment down 11.4%, both over 30% lower than last year.
Deb Walton, Chamber president, said, “These results underline the difficult conditions businesses continue to face. Persistent concerns around inflation, taxation and workforce challenges are weighing on confidence, while lower investment and weakening sales show how tight margins remain.
“Amid these pressures, there is still a clear sense of determination and adaptability across our region. North East businesses are resilient and committed, focused on protecting jobs, strengthening productivity and preparing for opportunities as conditions allow.
Energy usage
Energy remains a key concern for 52.1% of businesses, though slightly fewer than last quarter. Most continue to take action to manage costs, with 71.4% introducing some form of energy efficiency measure.
However, fewer businesses reported behavioural or investment changes, and only switching tariffs showed a small increase (+3%) this quarter.
Advocacy and support
The Chamber will continue to share these findings with policymakers to ensure the North East’s priorities remain central to the UK’s economic agenda.
These results also support the Chamber’s wider policy plan, Unlocking the North East Economy (2025–27), which outlines how business, government and communities can work together to drive growth and opportunity.
Rhiannon added, “These survey findings are more than just data; they reflect the lived experience of businesses across our region. Your insights ensure our advocacy remains grounded in evidence and focused on what matters most to employers.”
Download a copy of the Quarterly Economic Survey Q3 2025 report