Cost cutting and spending curbs make it tough for North East firms

Price pressures are forcing manufacturers to cut costs and rein in spending according to the latest ‘Economic Survey’ — published by the North East Chamber of Commerce.

The 2024 Q4 findings support Energy Solicitors Limited’s (ESL) view that firms increasingly require targeted legal advice to improve efficiencies and tackle fresh financial challenges.

A wide-ranging survey reported that increased labour costs, the price of raw materials, staffing issues and soaring energy prices have created the perfect storm within the manufacturing sector.

And businesses are increasingly turning to litigation specialists like ESL to unravel the complexities of contracts that could save — or cost — firms thousands.

The NECC report revealed that spiralling labour costs are creating pressure across sectors, with manufacturers (87%) most affected. Despite a 2.3% year-on-year decline, the 7.4% quarterly increase underscores persistent issues. Another significant pressure was the cost of raw materials with 65.2% of manufacturers citing this as a concern.

The Economic Survey confirmed that 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 (+1.7%) staff, while demand for full-time staff has declined by 5.1%. Recruitment difficulties remain, particularly for skilled manual and technical positions — 63.6% of manufacturers reported problems.

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 in the North East and the Chamber’s 

Rhiannon Bearne, executive director of policy and representation and deputy CEO at the Chamber, 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.”

Victoria Myers, Senior Partner at ESL, understands the challenges facing manufacturers across the UK and added: “These businesses are the backbone of the UK economy and we must do everything we can to alleviate the challenges they face as a result of 2025’s difficult trading environment. Effective litigation can go a long way towards easing the pressure on manufacturers looking to make significant cost savings and free up budgets for growth.”