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Key findings

  • Output contracts at much softer pace following a challenging end to 2024 
  • Weaker sales and rising costs affect staffing levels 
  • Scotland moves from 12th to sixth in terms of performance across all UK regions

Output shrinks as sales downturn worsens The Scotland Growth Tracker – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – was below the 50.0 neutral mark for a second month running in January. However, the index rose from 46.9 in December to 49.6, pointing to a much slower contraction in private sector output. A renewed uplift in services activity partly offset a further decline in manufacturing production. Businesses attributed lower output to a reduction in new orders, where the pace of decline accelerated to the steepest for 14 months. Output was also curbed by lower staffing levels. Once again, the downturn contrasted with mild growth across the UK as a whole. Positively, Scotland's rank out of the 12 monitored nations and regions rose from eleventh to sixth in January

Judith Cruickshank, Chair, Scotland Board, Royal Bank of Scotland, commented: 

“Scottish firms reported a leap in costs and prices at the start of 2025, just as the Bank of England raised its inflation forecast to 3.7%. Pricing pressure shot back up to levels last seen in the summer of 2023, according to respondents, with energy costs and rising employment costs all playing a role. Nevertheless, businesses said it wasn’t a worsening situation for output, with Scotland’s activity score recovering. “But uncertainty over the state of demand in future is clearly playing a role, even though firms in Scotland appear to have stronger expectations for the labour market than

Please see the regional report in full:

Royal Bank of Scotland UK Regional Growth Tracker (PDF, 1,855KB)

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