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Key Findings

  • London leads output growth in December and across the year as a whole
  • West Midlands gains momentum in the final stages of 2025
  • Business expectations improve in most areas

 

There were pockets of output growth across the UK in December, offsetting declines elsewhere, the latest NatWest Regional Growth showed.    

Expectations for business activity in the year ahead meanwhile improved in the majority of areas, but employment fell across the board.    

The Tracker's headline figure is the Business Activity Index. Any reading above 50.0 signals growth, and the further above the 50.0 threshold the faster the rate of growth signalled.  

London topped the rankings for business activity growth in December with an index reading of 54.9, cementing its position as the fastest-growing region on average across 2025 as a whole. There was a notable upturn in the West Midlands (52.9), which gained momentum throughout the fourth quarter. Higher activity was also recorded in the South West (52.2) and South East (51.9). The North West (46.6) saw the most marked decline in December.

 

Commenting on the Tracker’s findings, Sebastian Burnside, NatWest Chief Economist, said:

“The final report of 2025 has shown that many of the regions can take confidence from the resilience their businesses have shown over the course of the year and the positive impact they have made to the wider UK economy.

“As ever, there were varying trends in business activity in the final month of the year. London finished where it started as the fastest-growing region, while there was a late surge in the West Midlands, which continued to recover from the disruption surrounding the JLR shutdown earlier in the year. These two, along with the South East and South West, drove growth in December.

“Encouragingly, in the majority of nations and regions, business confidence in December was higher than it had been a year earlier, which is hopefully a good omen for growth prospects in 2026.

“The jobs market faced multiple headwinds in 2025, and that continued right through to the end of the year, with December seeing a broad-based decrease in employment as firms generally faced an increase in costs pressures.

“A rise in backlogs of work in four regions, which is the most in over two-and-half years, is perhaps an indication of increasing capacity pressures, which could help support labour market conditions in the coming months.”

 

Demand

Eight of the 12 UK nations and regions monitored recorded an increase in new business in December. This was up from just five in November and the most since October 2024. London recorded the strongest growth in new orders, followed closely by the West Midlands, Yorkshire & Humber and the South West. At the other end of the scale, Scotland and the North West saw the steepest decreases in demand.                      

Employment

Although employment fell across the board in December, rates of decline varied by nation and region. Labour markets in Scotland and the North East showed the most resilience, with both recording only fractional declines in workforce numbers. Firms in the East Midlands recorded the steepest fall in staffing levels, followed closely by their counterparts in the West Midlands.

Capacity

December saw an increase in backlogs of work in four English regions, namely London, the South West, West Midlands and North East. This was the most since April 2023. Across the rest of the UK, outstanding business was unchanged in the East of England, with further (albeit slower) declines recorded elsewhere.              

Inflation

Cost pressures generally intensified in December. In fact, only firms in Northern Ireland, which still ranked the highest for overall input price inflation, saw a slower increase in operating expenses than the month before. In all cases, the rates of cost inflation were above their respective historical series average.                           

Firms across the UK were more aggressive with their pricing strategies at the end of last year. After charges for goods and services had decreased in three out of the 12 nations and regions monitored in November, which was the most in over five years, they increased across the board in December, and generally at quicker rates. The steepest increase was in Northern Ireland, and the weakest in Yorkshire & Humber.         

Outlook

Business confidence towards future activity improved in just over half of the 12 nations and regions monitored by the survey. The greatest upswing in sentiment was seen in London, which also recorded the strongest optimism overall. Growth expectations remained lowest in Northern Ireland, despite having improved to a 14-month high.

 

­­­­­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

Hannah Brook
EMEA Communications Manager
+44 7483 439 812
hannah.brook@spglobal.com
press.mi@spglobal.com

NatWest UK Regional Growth Tracker

Download the latest NatWest UK Regional Growth Tracker.

Download

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 December were collected 4-19 December 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.

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