Price paid for delayed reopening
Scotland lagging rest of UK in two-speed recovery
Scotland was slower out of lockdown (pic: Terry Murden)
A two-speed economic recovery is emerging with Scotland lagging well behind other parts of the UK because it delayed reopening businesses.
Rising levels of business activity across England is not being matched north of the border which is also one of the worst areas in the UK for job prospects with one in three firms planning to cut jobs.
According to the latest NatWest RBS Regional PMI data, growth of the UK economy in July was primarily driven by rising levels of business activity across England which is reaping some economic benefit of a quicker reopening, “with Scotland and Wales playing catch up”.
The PMI Business Activity Index for July saw increases in business activity across all nine English regions and Northern Ireland. There were especially strong rates of growth recorded in the West Midlands, North East, Yorkshire & Humber and the South West.
Scotland is lagging behind the rest of the UK and the downturn here was the weakest seen during the crisis so far.
Sebastian Burnside, NatWest RBS chief economist, said: “The PMI data suggest that a two-speed recovery has emerged across the UK, which is closely associated with the pace at which each nation has lifted lockdown measures.
“July’s survey provided some eye-catching numbers, not least the near-record growth of business activity in the West Midlands, but it’s important to remember that what we’re seeing is merely a ‘technical’ rebound as businesses resume and ramp up operations following the lockdown.
“There’s still a long way to go in the recovery, but it does seem to be a case of so far, so good.”
New research from the CIPD and the Adecco Group showed that Scottish job prospects remain weak, with almost one in three (32%) organisations expecting to cut jobs in the third quarter of 2020, up from 19% three months ago.
The latest quarterly Labour Market Outlook survey found that overall hiring intentions in Scotland have remained relatively consistent over the last three months, with 43% of employers expecting to take on new hires three months ago compared to 41% this quarter – remaining well below levels seen in previous years.
This is the weakest set of data we’ve seen for several years– Lee Ann Panglea, CIPD
But the net employment balance has fallen dramatically to –17 from +6 over the last three months.
This compares to a net employment balance of -8 for the UK as a whole and is the second worst figure amongst all UK nations and regions behind the West Midlands.
Lee Ann Panglea, head of CIPD Scotland and NI, said: “This is the weakest set of data we’ve seen for several years.”