Key Findings
- South West remains a bright spot for the UK in April but activity falls elsewhere
- Demand for goods and services under pressure as prices rise
- Outlook for business activity clouded by market uncertainty
April's NatWest Regional Growth Tracker showed increasingly difficult operating conditions for businesses across the UK as they faced a combination of softer demand and rising costs. Firms have reported that increased global economic uncertainty, particularly related to US tariff announcements, is impacting demand across various regions. This is reflected in observations of reduced client activity and overall caution towards spending.
The Tracker – which surveyed businesses operating in the manufacturing and services sectors across 12 regions of the country from April 9 to 28 – showed business activity falling in all but one of the 12 UK nations and regions monitored by the survey in April. The sole exception was the South West, where output grew for the fourth month running but at a slower rate than in March.
The survey was conducted after US tariff announcements on 2 April, which, at the time, saw minimum tariff rates of 10% applied to imports into the US, as well higher so-called ‘reciprocal’ tariff rates on a number of countries. The latter of which were subsequently paused on 9 April for 90 days, except for those on mainland China.
The NatWest Regional Growth Tracker Business Activity Index is the first fact-based indicator of regional economic health published each month. A reading above 50 signals growth, and the further above the 50 level the faster the expansion signalled.
The North West moved to the bottom of the rankings with a reading of 46.7, having seen business activity fall at the quickest rate for more than four years. This compared with figures of 51.9 for the South West and 48.5 for the UK as a whole.
Commenting on the Tracker’s findings, Sebastian Burnside, NatWest Chief Economist, said:
“The tracker this month reflects the challenges that economic uncertainty can create for UK businesses of all scales.
“Firms across the UK reported a challenging start to the second quarter, with demand for goods and services falling in all areas amid this backdrop of economic volatility and rising prices. The South West was alone in recording growth in business activity.
"It's encouraging that firms are still looking to the future with some optimism, although growth expectations are lower than they have typically been in the past.
"Rising labour costs have added to pressure on businesses, following April's increases in National Insurance contributions and minimum wages.
“As firms look to mitigate rising costs, we've seen average prices charged for goods and services increase at faster rates, as well as a greater focus on workforces. Labour markets in all areas of the UK have felt the impact to some degree in recent months, with only Scotland avoiding a fall in employment in April.
“We cannot ignore the backdrop during which this survey was carried out but regardless, as we’ve seen in the past and as the South West and Scotland illustrates, UK business is resilient and can always offer reasons for optimism throughout.”
Demand
Firms in all nations and regions reported softer demand for goods and services in April. It marked the first time in almost two-and-a-half years that a broad-based decrease in new business has been recorded. The steepest decline was recorded in Northern Ireland*, while the greatest resilience in demand was seen in London and the South West.
Employment
April saw a near-universal decrease in employment at the start of the second quarter. Furthermore, in most cases, rates of decline quickened from the month before. This included the North West, which saw the most marked drop in workforce numbers. Labour market conditions showed resilience in Scotland, where headcounts stabilised following four straight months of decline.
Capacity
Backlogs of work (i.e. the volume of orders or projects awaiting completion) fell across all areas of the UK in April, in a sign of a general lack of pressure on business capacity. Firms in the North West recorded the fastest rate of depletion, followed by those in the East and West Midlands. Outstanding business fell only slightly in both the South West and North East.
Inflation
Nearly all of the 12 UK nations and regions monitored by the survey saw firms' input costs rise at a faster rate in April. Only Northern Ireland went against this trend, although the rate of input price inflation there was still the second-highest in more than two years. Cost pressures were strongest in the North East, and weakest in Scotland.
There was a general increase in output price inflation across the UK at the start of the second quarter. Prices charged rose fastest in Northern Ireland, where the rate of increase was the highest since December 2022. The slowest inflation was recorded in the East Midlands, though even there it was well above the long-run average.
Outlook
Although business expectations remained positive across the UK in April, sentiment was found to have weakened in almost all areas. The greatest drop in confidence was recorded in the North East, which saw the second-lowest degree of optimism ahead of only Northern Ireland. Firms in the West Midlands were the most upbeat about the outlook, while only those in Scotland were more positive than the month before.
Note: The latest monthly data was collected between 9 to 28 April 2025
Contact
NatWest
Jonathan Rennie
Regional Media & Campaigns Manager
+44 7769 932 102
jonathan.rennie@natwest.com
S&P Global Market Intelligence
Phil Smith
Economics Associate Director
+44 1491 461 009
phil.smith@spglobal.com
Corporate Communications
press.mi@spglobal.com
Notes to editors
Methodology
The NatWest UK Regional Growth Tracker data are compiled by S&P Global from responses to questionnaires sent to companies that participate in S&P Global's UK PMI surveys. S&P Global compiles data for Scotland, Wales, Northern Ireland and nine English regions*.
Survey responses are collected in the second half of each month and indicate the direction of change compared to the previous month. A diffusion index is calculated for each survey variable. The index is the sum of the percentage of ‘higher’ responses and half the percentage of ‘unchanged’ responses. The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease. The indices are then seasonally adjusted.
The headline figure for each region is the Business Activity Index. This is a diffusion index calculated from a single question that asks for changes in the volume of business activity (at service providers) or output (at manufacturers) compared with one month previously. The Business Activity Index is comparable to the UK Composite Output Index.
The survey data for April were collected 09-28 April 2025.
For further information on the survey methodology, please contact economics@spglobal.com.
*International Territorial Level 1 definitions.
About PMI
Purchasing Managers’ Index™ (PMI®) surveys are now available for over 40 countries and also for key regions including the eurozone. They are the most closely watched business surveys in the world, favoured by central banks, financial markets and business decision makers for their ability to provide up-to-date, accurate and often unique monthly indicators of economic trends. To learn more go to www.spglobal.com/marketintelligence/en/mi/products/pmi.
About S&P Global (NYSE: SPGI)
S&P Global provides essential intelligence. We enable governments, businesses and individuals with the right data, expertise and connected technology so that they can make decisions with conviction. From helping our customers assess new investments to guiding them through ESG and energy transition across supply chains, we unlock new opportunities, solve challenges and accelerate progress for the world.
We are widely sought after by many of the world’s leading organizations to provide credit ratings, benchmarks, analytics and workflow solutions in the global capital, commodity and automotive markets. With every one of our offerings, we help the world’s leading organizations plan for tomorrow, today www.spglobal.com.
