Cyber attacks hit more businesses in North East, while tax increases and inflationary pressures top concerns, survey reveals

Cyber attacks are affecting more family-owned, privately owned and owner-managed businesses in the North East than the national average, while tax increases and inflationary pressures remain the region's biggest business concerns, according to new research from accountancy and business advisory firm Armstrong Watson.

The survey highlights how cyber security has become a mainstream business issue rather than a specialist IT concern. This is particularly evident in the North East, where 39% of respondents report experiencing a cyber incident compared to 31% nationally. Recent cyber exposure is also more pronounced in the region, with 30% of incidents occurring within the last three years, versus 23% nationally. Understandably, there is also a greater level of caution across the region, with 79% who are concerned about the threat of a cyber attack on their business, compared with the 68% nationally.

Against a backdrop of political change and ongoing policy reform, survey also found businesses remain ambitious and focused on growth, but the majority are also increasingly concerned about the potential impact of tax increases (81%), inflationary pressures on costs (77%) and changes in government policy (78%) over the coming 12 months.

The 2026 Family, Privately Owned and Owner-Managed Business Survey is Armstrong Watson’s sixth to date and one of the largest of its kind, with 840 businesses from across all sectors and regions sharing their views.

People-related challenges continue to feature prominently with 78% reporting difficulty recruiting new talent. Half cite a lack of skilled or suitable candidates as their biggest recruitment challenge while more than a third say they are unable to offer attractive salaries for roles.

Despite these challenges, businesses are taking proactive steps. More than half (51%) have implemented measures to improve staff retention, while the use of salary sacrifice schemes has increased, with almost half (49%) now offering them, compared with 31% in 2025.

The findings also suggest businesses have not lost their appetite for growth, as 80% of North East respondents have a business plan with actionable goals. Key measures to prepare for innovation and growth include tax planning (33%), capital investment (32%) and investment in staffing (31%).

Technology is another area where business behaviour is evolving rapidly, with 39% of respondents now using AI within their business across the North East and a further 32% are actively considering it. While North East businesses may be slower to adopt AI, compared to 46% using it nationally, this is a significant increase in the last 12 months, up from 13% across the region in 2025.

Paul Dickson, Chief Executive and Managing Partner at Armstrong Watson, said: “Businesses have experienced a period of significant political change, alongside continued reforms affecting employment costs and National Insurance contributions, succession and business taxation. Many owners are still assessing what these changes will mean for their businesses, investment plans and future growth. These are not short-term issues, which means businesses are having to think more strategically about how they operate and grow.

“The survey also highlights growing cyber concerns, with North East businesses reporting higher levels of cyber incidents than the national average, reinforcing the need for continued vigilance and resilience.

“What's particularly encouraging is that many businesses are not standing still. We have seen a significant increase in AI adoption, greater investment in staff retention initiatives, and a growing focus on succession planning. Despite the challenges, there remains a strong appetite to innovate, improve and prepare for the future. The key will be balancing ambition with resilience and ensuring businesses have the right advice and support around them as they navigate change.

“Thank you once again to all those who shared their views.”

The full Armstrong Watson Family, Privately Owned and Owner-Managed Business Survey Report is now available to download.