Key Findings
- New business placed with private sector firms in the North East of England climbs for 11 consecutive months
- The region remains top performer outside of London for February
- Wales and South West experience improved business activity
The North East of England continues to drive regional growth for the UK, according to the latest NatWest UK Regional Growth Tracker for February.
The index is the first fact-based indicator of regional economic health published each month, offering a snapshot of performance for 12 nations and regions across the country.
According to the latest report, the month-on-month change in the combined output for the North East manufacturing and service sectors – increased from 53.1 in January to 53.7 in February, to signal a monthly improvement for the twelfth consecutive month for the area.
Outside of London, Wales and the South West also experienced improved growth, which was reflected in their sense of optimism for the year ahead.
However, for the first time the report showed that all 12 nations and regions streamlined their employment last month as they experience rising costs and prepare for National Insurance Contributions later in the year. This was most acute in Northern Ireland which has enjoyed continued employment growth for nearly four years.
Sebastian Burnside, NatWest Chief Economist, commented:
“The North East continues to play a critical role in driving business activity for the UK in 2025.
“For almost a year, the region has experienced continued growth, with February proving to be one of its most successful periods.
“London is showing great resilience, extending its growth streak to 27 consecutive months. Whilst February saw Wales and the South West moving in the right direction.
“But these latest figures also show the impact of higher costs and prices, with firms across the country scrutinising their staffing levels.
“Nonetheless, all regions report expectations that conditions will improve in future.”
Demand
Out of the 12 nations and regions covered by the report, two saw growth in inflows of new business in February, - the North East and London. Demand came under pressure elsewhere, linked in part to customers reining in spending amid cost increases. Firms in Northern Ireland registered the steepest drop in inflows of new work for the second month running, followed by those in the North West.
Employment
Workforce numbers were streamlined across each of the 12 UK nations and regions monitored by the survey in February, the first time this has happened for a little over four years. Employment fell only slightly in the likes of the North East and Scotland, however. The most marked decreases were seen in the East of England and West Midlands.
Capacity
February saw another decrease in outstanding business (i.e. new orders or projects awaiting completion) across the UK. Only firms in the North East bucked the general trend and recorded a rise in backlogs of work – the fifth in as many months. Data indicated that capacity pressures were particularly low in the North West and East Midlands.
Inflation
Firms in all parts of the UK faced rising costs midway through the first quarter, with rates of inflation above their historical averages in all cases. Input price inflation was strongest in Northern Ireland, where it accelerated for the fourth month running to the highest since March 2023. Cost pressures were lowest in Wales.
Latest data showed strong and broadly similar rates of inflation in goods and services prices across the 12 UK nations and regions. In terms of index readings, the difference between the highest ranked region for output price inflation, South West, and the lowest, North East, was just over two points. Rates of increase ticked down in just over half of cases, albeit only slightly at the UK level.
Contact
NatWest
Jonathan Rennie
Kate Visser
