Confidence has surged among North East business leaders, reaching a two-year high thanks to historically high profit growth. Research from the Institute of Chartered Accountants in England and Wales (ICAEW) indicates that sentiment is now at its strongest since the final quarter of 2021, doubling its historic norm.

According to a survey of regional company leaders, profits soared by 4.7% in the 12 months to Q1 2024 – marking the highest rate of growth across any UK region and significantly surpassing the historical norm of 2.9%.

The ICAEW’s findings align with a decline in the number of North East companies filing for administration, dropping by more than a quarter in the first quarter of the year. While acknowledging the encouraging trend, James Lumb, managing director and head of the North East team at Interpath Advisory, cautioned against complacency. He emphasised ongoing challenges faced by businesses, particularly in sectors such as construction, logistics, brewing, and recruitment.

Firms anticipate a further boost in profits, expecting a 5.9% increase in the year ahead, propelled by projected sales growth of 5.5% and export sales growth of 3.5%. There is optimism about this confidence surge within the business community, attributing it to the easing of inflationary pressures. The potential for continued growth in domestic and export sales has also been highlighted, providing reasons for North East businesses to be hopeful.

This is the time to emphasise the importance of early support for businesses facing difficulties, recognising that timely intervention can greatly influence outcomes. Looking ahead, he predicted a potential rise in the administration rate, marking a critical phase in the UK economy’s adjustment.

The positive economic outlook, including anticipated sales growth and increased profitability in the NorthEast region, may make distressed businesses more attractive investment prospects for buyers looking to turn them around.

Early intervention and strategic support for distressed businesses can lead to more favourable outcomes for both buyers and sellers. Buyers equipped with the necessary resources and expertise can capitalise on these opportunities to acquire distressed businesses at potentially advantageous terms.