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The Herald Scotland
12 hours ago
- Business
- The Herald Scotland
Scottish economy confidence votes highlight false narrative
Scotland was one of six of the 12 UK nations and regions to record expansion last month. Its growth was driven by 'strong expansion' in the services sector, with manufacturing output falling again. The business activity index for Scotland - a seasonally adjusted measure of the month-on-month change in the combined output of the manufacturing and services sectors - rose from 47.4 in April to 50.5 in May on a seasonally adjusted basis to indicate renewed growth. This marked the first increase in output on this measure for six months, and Scotland was placed fifth out of 12 in the business activity index league table of the UK nations and regions. Meanwhile, Scotland was the only part of the UK to see growth in private sector employment in May. Sebastian Burnside, chief economist at Royal Bank of Scotland, said: "Following a near-universal decline in output across the 12 monitored UK regions and nations in April, Scotland was one of six areas to experience an upturn in business activity during May.' He added: 'The Scottish labour market demonstrated resilience, with firms adding to their workforce numbers for the first time in six months. Notably, it was the only tracked area to report an increase in employment.' While we should not get carried away with Scotland's performance in the growth tracker survey, there are undoubtedly some positives. Also heartening were the latest figures on financial services foreign direct investment for Scotland published by accountancy firm EY on Monday. These showed Scotland was again second only to London as a destination for financial services foreign direct investment (FDI) in the UK last year, achieving a decade-high for the number of projects won. Scotland attracted 11 financial services FDI projects in 2024, up from nine in the previous year, the EY figures revealed. This advance was achieved in spite of a sharp fall in the overall number of financial services FDI projects won by the UK last year, which makes it all the more impressive. The UK attracted 73 such projects last year, down from 108 in 2023. EY's figures show that Edinburgh, with the six financial services FDI projects it attracted last year, was the joint-top city outside London for such wins, alongside Manchester. London attracted 39 financial services FDI projects in 2024. The US continues to be the top source of financial services inward investment for Scotland, accounting for five such projects in 2024. EY noted the US has been the source of 38 financial services FDI projects for Scotland over the last decade. My column in The Herald on Wednesday on the EY figures observed: 'It was heartening indeed to hear Scotland not only managed to retain its impressive place as second only to London as a destination in the UK for financial services foreign direct investment last year but also bucked a declining trend. 'That said, it is difficult to shake the impression that not everyone in Scotland will be delighted at this news. There seem to be many who would rather it was all going horribly wrong, so they could point their fingers and declare, for political reasons, that Scotland is some kind of basket case and that it is all the SNP's fault.' Glasgow earlier this year climbed further in a closely watched league table of global financial centres. Read more The city rose by five places to 32nd spot in the latest twice-yearly Z/Yen Global Financial Centres Index, published in March. Back in September 2023, Glasgow was in 51st spot. Edinburgh's position was, at 29th in the latest rankings, unchanged from September 2024 when it climbed to its current position from 33rd but its overall score improved. Sue Dawe, EY's Scotland managing partner for financial services, said of the accountancy firm's latest FDI figures for this sector: 'We continue to see Scotland perform well in attracting financial services FDI projects. In 2024, we saw almost as many projects expanding existing operations as we did brand new projects - which is a great indication that these companies view Scotland as a viable proposition to continue investing in.' It is most encouraging to see Scotland continuing to perform well in attracting financial services inward investment in what is clearly a fiercely competitive international arena. And Ms Dawe is right to highlight as a positive the fact that many of the successes last year were around further investment by overseas players which have clearly found Scotland an attractive place to set up operations. The latest strong numbers for financial services FDI for Scotland are testament to the hard work of the sector, universities and other educational institutions, and government agency Scottish Enterprise's Scottish Development International arm. Ms Dawe noted: 'Financial services isn't simply one of Scotland's growth sectors - it's the growth sector that enables other growth sectors; so, if we get this right and continue to be the most attractive place to establish financial services operations outside London, the Scottish economy as a whole will benefit.' Long may Scotland's success on the inward investment front, in financial services and across myriad sectors, continue. Votes of confidence in Scotland from overseas companies highlight the huge extent to which some of the downbeat and often politically motivated narrative around the nation and its economy is wide of the mark.
The Herald Scotland
09-06-2025
- Business
- The Herald Scotland
Scottish economy tops the UK table on one key measure
The business activity index for Scotland, a seasonally adjusted measure of the month-on-month change in the combined output of the manufacturing and services sectors – rose from 47.4 in April to 50.5 in May on a seasonally adjusted basis to indicate a renewed rise in business activity. This marked the first increase in output on this measure for six months. With May's reading of 50.5 only slightly above the no-change mark of 50, Royal Bank of Scotland observed the rate of expansion last month was 'marginal and similar to that seen across the UK as a whole'. It added: 'The growth in activity was primarily driven by a stronger service sector performance, where a fresh increase in activity was supported by a renewed upturn in new business. This helped to offset a further downturn in manufacturing output. 'At the same time, Scottish private sector companies recorded a renewed increase in employment, making Scotland the only area among the 12 monitored UK regions and nations to register job creation.' Read more The growth in business activity recorded by Scotland's private sector economy in May placed it fifth in the league table of the 12 UK nations and regions. Sebastian Burnside, chief economist at Royal Bank of Scotland, said: "Following a near-universal decline in output across the 12 monitored UK regions and nations in April, Scotland was one of six areas to experience an upturn in business activity during May. This uptick in activity was primarily driven by the service sector, where a strong expansion helped to offset a further decline in manufacturing output. 'Demand conditions meanwhile moved closer to stabilising, as the decline in new business was only marginal and the softest in six months. Additionally, firms exhibited greater confidence in their projections for business activity over the year ahead.' He added: 'The Scottish labour market demonstrated resilience, with firms adding to their workforce numbers for the first time in six months. Notably, it was the only tracked area to report an increase in employment. "As was the case across all 12 UK regions and nations, cost pressures eased across Scotland in May. In fact, Scotland recorded the weakest rate of cost inflation of all monitored areas, albeit one that remained sharp overall. Charges levied for Scottish goods and services were also raised at a slower pace than in April."
The Herald Scotland
19-05-2025
- Business
- The Herald Scotland
CalMac ferries - privatisation surely not the answer
On the bright side for Scotland, it was the only one of the 12 UK nations and regions not to suffer a fall in private sector employment in April. This followed four consecutive months of decline in employment north of the Border, although Scotland had recorded the least-sharp fall among the nations and regions in March. While the stabilisation of private sector employment in Scotland is no reason to be popping champagne corks, it is a good outcome under the circumstances. Royal Bank said of the private sector employment picture across the UK: '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. Labour market conditions showed resilience in Scotland, where headcounts stabilised following four straight months of decline.' Sebastian Burnside, chief economist of Royal Bank, said: '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.' In terms of business activity in April, there was mixed news for Scotland. Overall Scottish private sector manufacturing and services activity fell in April, and at a significant pace. That said, the rate of decline decelerated significantly from that in March, which had seen the fastest drop since November 2022. According to the Royal Bank report, south-west England was the only part of the UK to record growth in overall private sector manufacturing and services activity last month. Scotland's seasonally adjusted business activity index, which measures the month-on-month change in the combined output of the manufacturing and services sectors, was 47.4 in April, well adrift of the 50 mark deemed to separate expansion from contraction. However, the latest number was a significant improvement on the March index of 45.9, even if it was well short of the 49 reading for February. It placed Scotland 10th among the 12 UK nations and regions on this measure, a slight improvement on the ranking of 11th in the previous monthly table. And there was not a great deal of difference between much of the UK when it came to changes in business activity in April. The business activity index for Scotland last month was not far off the reading of 48.1 for north-east England, which was in fourth spot. Royal Bank made no bones about the difficult backdrop for companies across the UK, flagging the rise in employers' national insurance contributions which was announced in Chancellor Rachel Reeves' October 30 Budget and took effect on April 6. The bank also flagged an increase in minimum wages which came into force on April 1. Data published by the Office for National Statistics on Thursday showed the UK economy grew by a faster-than-expected 0.7% quarter on quarter in the opening three months of this year. However, economists emphasised the challenges ahead in the wake of the gross domestic product figures. Mr Burnside said of the Royal Bank survey findings for April: 'Firms across the UK reported a challenging start to the second quarter, with demand for goods and services falling in all areas amid a backdrop of economic uncertainty and rising prices.' He added: "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.' Elsewhere, CalMac remained in focus last week following the Scottish Government's May 8 announcement of the direct award of the Clyde and Hebrides Ferry Services contract to the incumbent operator. Read more Ferguson Marine, the Port Glasgow shipyard owned by the Scottish Government, has also been in the spotlight in recent days over a further cost overrun and delay in the Glen Rosa ferry it is building for CalMac, which is now expected to be delivered in the second quarter of next year. The contract to build the long-delayed Glen Sannox, which came into service on the Troon to Brodick route in January, and Glen Rosa was awarded and has been managed by Caledonian Maritime Assets Limited, which like CalMac is owned by the Scottish Government. While CalMac's operations have been affected by the delays to delivery of the vessels, the ferry operator is not involved in the procurement process. Returning to the direct award of the new, 10-year Clyde and Hebrides Ferry Services contract which runs from October 1 to CalMac, my column in The Herald on Wednesday observed: 'The last thing anyone needs right now is for a private company to be allowed to wade in to run the ferry services and - on top of the recent difficulties endured by communities served by CalMac arising from issues around an ageing fleet which are being addressed anyway - start trying to wring out a substantial profit. 'If anyone is any doubt about that, they need only look at the shambles that has ensued since the privatisation of British Rail, and ask if they would really want that for communities which have generally been served well by CalMac for decades.' Scotland's ferries clearly constitute a politically charged topic that divides opinion, but privatisation is surely not the answer.
Business News Wales
16-05-2025
- Business
- Business News Wales
Regional Growth Tracker Reveals Back-to-Back Declines in Output
Latest Cymru Growth Tracker data from NatWest signalled back-to-back declines in output, as activity fell at a faster pace in April. The headline Wales Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region's manufacturing and service sectors – dropped to 48.1 in April, down from 49.2 in March, to signal a modest decrease in business activity. Firms have reported that increased global economic uncertainty, particularly related to US tariff announcements, is significantly impacting demand across various regions. This is reflected in observations of reduced client activity and overall caution towards spending. Meanwhile, demand conditions remained subdued as new orders declined for the sixth month running. Lower new business dampened output expectations for the year ahead which were at their lowest for two-and-a-half years. At the same time, input costs and output charges rose at steeper rates, as firms noted hikes in wage bills and associated costs, especially. Input price inflation accelerated to the sharpest since February 2023. At the same time, the rate of charge inflation was the fastest in two years. 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. A subsequent announcement on 9 April saw a 90-day pause on most higher tariff rates. Sebastian Burnside, Chief Economist of NatWest Group, summarised the report's findings for Business News Wales. Sebastian Burnside, NatWest Chief Economist, said: 'The tracker this month reflects the challenges that economic uncertainty can create for UK businesses of all scales. 'Welsh businesses reported a challenging start to the second quarter, with demand falling amid a backdrop of economic uncertainty and rising prices. Output declined modestly and at a rate that was slightly faster than the UK average. '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, UK business is resilient and can always offer reasons for optimism throughout.' Performance in relation to UK Although modest overall, the fall in Welsh output levels was the fastest since November 2024 and was quicker than the UK average. Panellists noted that economic uncertainty and reduced purchasing power at customers weighed on overall demand. The rate of contraction in new business was only marginal, however, having slowed from March. Although comparing unfavourably with the series' long-run average, the pace of decline was slower than the UK trend. Output expectations among Welsh firms were among the least upbeat of the 12 monitored UK areas, meanwhile. Only the North East and Northern Ireland recorded lower positive sentiment in the year ahead outlook. Moreover, economic and geopolitical uncertainty dented optimism, as the degree of confidence dropped to the weakest since October 2022. Meanwhile, the rate of decline in headcounts quickened slightly and remained steep. Moreover, the pace of job cuts was faster than both the long-run and UK averages. Panellists stated that lower employment was due to the non-replacement of voluntary leavers due to cost considerations. A reduction in new orders reportedly enabled companies to clear unfinished work. Although strong and one of the sharpest of the 12 monitored UK areas, the pace of depletion slowed to the weakest since last September. Welsh private sector firms indicated a faster rise in average cost burdens at the start of the second quarter. As well as being quicker than the series average, the pace of increase was above the UK trend. Anecdotal evidence suggested that higher operating expenses stemmed from greater energy and wage bills. At the same time, selling prices also increased at a quicker pace in April. The rate of charge inflation was the fastest in two years and the second-sharpest of the 12 monitored UK areas, fractionally behind that seen in Northern Ireland. Companies stated that they sought to pass-through higher costs to customers.
The Herald Scotland
14-05-2025
- Business
- The Herald Scotland
Scottish economy tops every other part of UK on one measure
However, overall Scottish private sector manufacturing and services activity fell in April, albeit the pace of decline decelerated significantly from that in March. South-west England was the only part of the UK to record growth in overall private sector manufacturing and services activity last month, according to the report from Royal Bank. Scotland's seasonally adjusted business activity index, which measures the month-on-month change in the combined output of the manufacturing and services sectors, was 47.4 in April. This is well below the level of 50 deemed to separate expansion from contraction. The business activity index for Scotland had tumbled to 45.9 in March from 49 in February on a seasonally adjusted basis, to indicate the fastest pace of decline since November 2022. The latest reading placed Scotland 10th in the league table of business activity readings for the 12 UK nations and regions, a slight improvement on the nation's ranking of 11th in the previous monthly table. However, the April reading for Scotland was not that far adrift of that of 48.1 for north-east England, which was in fourth spot. South-west England achieved a business activity index of 51.9 in April. London was second in the league table with a reading of 49.7 – indicating a marginal fall in business activity last month. Northern Ireland was 11th in the business activity index table in April, the latest survey reveals, with north-west England in 12th place. Read more Royal Bank said of the private sector employment picture across the UK: '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 [of England], 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.' Scotland had experienced the least-sharp decline in private sector employment among the 12 UK nations and regions in March. All UK nations and regions saw overall falls in new business for firms across their private sector economies in April, the latest survey showed. Scotland recorded the eighth-sharpest fall in new business. The bank highlighted the effect of the increase in employers' national insurance contributions, which was unveiled in Chancellor Rachel Reeves' Budget in October last year and took effect from April 6. It also flagged the rise in minimum wages which came into force on April 1. Sebastian Burnside, chief economist of Royal Bank of Scotland, said: "Firms across the UK reported a challenging start to the second quarter, with demand for goods and services falling in all areas amid a backdrop of economic uncertainty and rising prices. The south-west [of England] was alone in recording growth in business activity.' He added: "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.' Cost pressures were strongest in north-east England, and weakest in Scotland, the survey showed.
