Chamber survey presents more positive picture for businesses despite rising cost pressures

However, rising price pressures, renewed concerns around energy costs and inflation, and weaker profitability expectations suggest businesses continue to face a challenging operating environment.

Headline findings of the Q2 2026 survey

• Fuel costs saw the sharpest increase this quarter (+23.4%), alongside rising raw material (+18.5%) and utility (+9.9%) costs.
• UK sales rose by 18.6%, with UK orders increasing by 17.5%, signalling stronger domestic demand. However, export sales and orders decreased from last quarter.
• Future workforce intentions increased by 23%, while recruitment activity also rose, particularly for full-time (+10.2%) and part-time (+7.1%) roles.
• Despite stronger business activity, profitability expectations declined by 9.1%, while energy prices became the fastest-growing concern for businesses.

Deborah Walton, Chamber president, said: “This quarter’s results highlight growing confidence among North East businesses, with significant improvements in sales activity, recruitment intentions and investment in workforce development.

“Businesses are clearly looking ahead, with future workforce plans reaching their highest level for some time and training investment increasing strongly compared with both last quarter and a year ago.”

Price pressures and concerns

Price pressures increased across most indicators this quarter, particularly fuel (+23.4%), raw materials (+18.5%) and utilities (+9.9%). Despite this, most cost pressures remain lower than a year ago, with labour costs, finance costs and other overheads all showing annual declines. Fuel was the exception, increasing by 18.3% year-on-year.

Business concerns also shifted this quarter. Worries around business rates, crime and taxation eased, while concerns about energy prices, inflation and exchange rates all increased.

Workforce and recruitment

Future workforce expectations rose sharply (+23%), supported by increased recruitment for all roles. Current workforce levels also improved slightly compared with last quarter, although they remained below Q2 2025 levels.

However, recruitment difficulties increased across all job categories, particularly for semi and unskilled and clerical roles.

Business activity and investment

Business activity generally strengthened, with notable increases in UK sales, UK orders and exporting. The proportion of businesses operating at full capacity also edged up.

Investment intentions were mixed. Training investment plans increased strongly (+13.2%), while plant investment declined (-7.6%). Profitability expectations also weakened, highlighting continued caution despite stronger domestic trading conditions.

Energy

Concern about energy prices rose significantly this quarter, with 58.1% of businesses identifying it as an issue. More than half of respondents reported taking action to reduce energy costs through efficiency measures and reduced energy usage.

Outlook and advocacy

Overall, the Q2 2026 results point to stronger business activity and growing confidence in future workforce. However, rising cost pressures, particularly around fuel and energy, alongside weaker profitability expectations and recruitment difficulties, continue to weigh on business confidence.

Rhiannon Bearne, deputy CEO at the Chamber, said: “As businesses and communities face further change on the national political stage, stable policy, investment in infrastructure and support for competitiveness will be critical to sustaining this cautious momentum.

“The North East Chamber of Commerce will continue to champion the needs of North East businesses and ensure their experiences help shape policy not just regionally but, through our strong partnership with the British Chambers of Commerce, nationally as well.”

The QES is carried out in partnership with the British Chambers of Commerce. Q2 2026 was conducted between 11th May and 8th June 2026.

Download a copy of the Quarterly Economic Survey Q2 2026 report here.