Companies in the region reported higher confidence in their own business prospects, up five points to 73 percent, and greater optimism in the economy, up 44 points to 66 percent.

This gives a headline confidence reading of 69 percent, the highest recorded in any UK nation or region in February.

A net balance of 76 percent of businesses in the region also expect to increase staff levels over the next year, up 32 points on last month.

Martyn Kendrick, regional director for the North East at Lloyds, said: “North East firms’ outlook continues to brighten, buoyed by both greater optimism in the economy and their own prospects.

“We’ll continue to support the region’s businesses as they look to capitalise on this confidence – helping them take the steps they need to drive further growth, whether that’s by hiring, entering new markets or implementing new technologies.”

Looking ahead to the next six months, North East businesses identified their top target areas for growth as investing in their team, for example through training (52 percent), entering new markets (45 percent) and introducing new technology, such as automation or AI (37 percent).

The Business Barometer, which surveys 1,200 businesses monthly and has been running since 2002, provides early signals about UK economic trends both regionally and nationwide.

Overall, UK business confidence rose 12 points in February to 49 percent — its highest level since August 2024.

Firms’ optimism in their own trading prospects increased six points to 57 percent, while their confidence in the wider economy rose 18 points to 42 percent.

The North West and East of England followed the North East as the second-most confident UK nations or regions in February (both at 61 percent).

All four sectors surveyed saw double-digit increases in confidence.

The largest improvements were seen in manufacturing, which rose by 13 points to 51 percent, and construction, which increased by 14 points to 50 percent.

Retail also experienced a significant gain, up 11 points to 51 percent, and services rose by 10 points to 48 percent.

Within the services sector, hospitality firms posted a particularly strong rebound in sentiment.

Confidence across these sectors reached their highest levels in several months, ranging from four months in services to seven months in manufacturing.

Hann-Ju Ho, senior economist at Lloyds Commercial Banking, said: “The rise in business confidence demonstrates the resilience of UK businesses and their ability to navigate challenges, such as rising costs and uncertainty.

“Increased optimism, along with an expected uplift in trading prospects, is prompting businesses to invest in growing and upskilling their workforce, putting them in a prime position to capitalise on increased demand and drive future growth.”