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Worst performer in UK

Scottish business activity ‘mired in a steep downturn’

Nicola Sturgeon

Nicola Sturgeon delayed reopening the economy

Scotland has shown the steepest decline in business activity of any area of the UK, according to new data.

While the lifting of lockdown has seen the slump easing in all other parts of Britain the latest figures from RBS/NatWest show Scotland “mired in a particularly steep downturn”.

The PMI Business Activity Index for June even indicates slight growth in output and demand in some areas.

Scotland’s poor performance will add fuel to claims that the First Minister’s decision to delay reopening the economy is causing damage to businesses and costing jobs. 

The index is the first fact-based indicator of regional economic health published each month, tracking the monthly change in the output of goods and services across the private sector. A reading below 50 signals contraction, and the further below the 50 level the faster the decline signalled.

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The East and West Midlands recorded the strongest trends in business activity in June. Both registered a Business Activity Index reading of 50.4, signalling their first respective increases in output for four months, albeit marginal. In all other areas, business activity fell at a much slower rate than in May.

The worst-performing area in June was Scotland with a reading of 37.1. It was overtaken by Northern Ireland, which saw a near 24-point rise in its Business Activity Index – the sharpest increase of all 12 regions monitored by the survey.

Three of the 12 monitored regions saw a renewed rise in new business in June, namely the East Midlands, West Midlands and Yorkshire & Humber. Elsewhere, rates of decline eased further from the historic lows seen in April. Firms operating in Scotland recorded the most marked downturn in new business, followed by those in Northern Ireland, the South West and London. 

Sebastian Burnside, RBS/NatWest chief economist, said: “It was across the Midlands where the data showed the most positive trends in business activity, with Yorkshire & Humber also displaying signs of stronger demand. At the other end of the scale, Scotland, with its relatively slower pace of reopening, was furthest behind on its path to recovery.

“A common theme across all areas of the UK is a sustained decline in employment. Rates of staff shedding have continued to moderate in all areas, but with businesses still generally operating well below capacity, we’ve seen another round of marked job cuts across the board.

“With the furlough scheme set to be wound down over the coming months, the outlook for the labour market is clouded in uncertainty.

“Nevertheless, with the survey indicating a general improvement in business confidence towards future activity, firms feel that the worst is behind them and their focus is now on making up the lost ground.”   



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