Optimism among business leaders in the north-east of England has skyrocketed more than anywhere else in the country since the general election, new figures show.
The survey data from the Institute of Directors (IoD), seen exclusively by Yahoo Finance UK, chime with the results in the region, which saw the second biggest swing to the Conservatives of any part of Britain.
“The north-east of our grandparents was a very different place,” said the Conservative mayor for Tees Valley Ben Houchen.
Coal, shipbuilding, oil, manufacturing, and other heavy industries were the lifeblood of the region for much of the 20th century, and it has long been a Labour party heartland.
Even when 33-year-old Houchen was a teenager growing up in Stockton-on-Tees, Labour won around 60% of the vote in the region in the 2001 general election.
But old industries and voting habits alike have waned, and on polling day on 12 December this year the north-east found itself at the centre of a political earthquake.
Seven former Labour strongholds fell to the Conservatives in some of the biggest upsets of the night, including former prime minister Tony Blair’s constituency and mining district of Sedgefield.
‘Tory tsunami from the Wear to the Tees,’ read the headline on a copy of the Northern Echo newspaper as prime minister Boris Johnson signed it for supporters on a triumphant post-election visit earlier this month.
The 3.9% swing to the Conservatives in the north-east was the second biggest of any region, leaving the party’s vote share only 4.3% behind Labour across its 29 seats.
An early signal of the same trend had come in 2017 when former lawyer and entrepreneur Houchen became Tees Valley’s first ever mayor, with the unlikely Conservative victor chairing a cabinet of five local Labour council chiefs.
A survey of members of the IoD published this week suggests the Conservative landslide also appears to have buoyed the spirits of business leaders in the north-east more than anywhere else.
Net confidence levels about the economy in the year ahead — the percentage feeling optimistic minus those feeling pessimistic — soared from zero in November to 71% in December.
That marked both the biggest month-on-month rise and the highest level of current optimism of any region in the UK.
Some may find such findings surprising, as the region has a strong manufacturing base more reliant than other regions on continued frictionless trade with the EU. Fears over Nissan’s future in Sunderland have hung over the town ever since the referendum.
Prime minister Boris Johnson’s Brexit stance might therefore have been expected to rattle local business chiefs.
His re-election not only appears to have ended any prospect of continued EU membership, but his deal also paves the way for new trade barriers and a deeper rupture with Brussels than planned by his predecessor.
Tej Parikh, the IoD’s chief economist, said members’ optimism may reflect the fact a strong government majority at least gave firms clarity over Britain’s immediate future, regardless of their politics.
“Uncertainty hasn’t cleared, but it’s given a manufacturing-focused region the wiggle room to make some decisions next year,” Parikh told Yahoo Finance UK.
“It’s been a period of stasis for lots of our members in the region. They are very capital-heavy, but it hasn’t made any sense to invest.
“This election creates clarity Brexit is going to happen. Some of them can realise some pent-up investment, replacing machinery and capital equipment.
“Even if the outcome is bad, knowing something is happening at least focuses the mind.”
Business chiefs’ underlying political views could also be shaping their positive outlook, perhaps simply reflecting higher support for Brexit among voters at large in the region.
The north-east had the third highest Leave support in the referendum, with 58% voting out. Beliefs on Brexit were undoubtedly vital in the election itself, with Johnson’s upbeat ‘Get Brexit done’ message resonating with many former Labour voters.
It is worth noting that the West Midlands, Britain’s most Brexit-backing region, had the second highest increase (up 71%) and second highest net levels (40%) of business optimism behind the north-east.
Meanwhile levels of pessimism among directors of firms were among the highest in the two most Remain-voting parts of the UK, Scotland and London.
Houchen, who some new local MPs say paved the way for their success through his work as a Tory mayor, suggested the traditional Conservative focus on entrepreneurship was increasingly resonating in the north-east.
He told Yahoo Finance UK that while people once had jobs for life in large firms and state-owned industries, “people in the workforce today know that entrepreneurship is one of the best ways to success.”
“It comes as no shock to me that the north-east has experienced the largest boost in business confidence of anywhere in the country. We are the region most in need of investment and growth, and businesses are responding to that,” he added.
He said business numbers had increased in the past year in the Tees Valley, and the increased business birth rate was outperforming the national trend.
Houchen has taken advantage of his own new position and powers, handed down from central government in a devolution deal signed under former chancellor George Osborne’s ‘northern powerhouse’ agenda.
He made headlines by bringing an ailing local airport into public ownership, and set up a £20m business support fund for local firms struggling to get help from national lenders.
But much of the region’s economic success is likely to be heavily influenced by Brexit for the foreseeable future at least.
With Britain set to leave in January but no trade terms agreed beyond a one-year transition period, business chiefs will be praying the fog of uncertainty does not return with a vengeance in the New Year.