Key Findings
- London and South West led regional growth with upturns seen in South East and Yorkshire & Humber during March
- Challenges experienced in January and February for Scotland and Northern Ireland remain
- Market conditions remain challenging and we could see continued challenges in the coming months
March’s NatWest Regional Growth Tracker showed improved business growth in more regions of the UK at the end of Q1 – but the majority are still being affected by wider economic uncertainty.
The Tracker – which surveyed businesses operating in the manufacturing and services sectors across 12 regions of the country from March 12 to 27 – showed London and the South West led business growth last month, with improvements seen in the South East and Yorkshire and Humber.
As witnessed in January and February, most regions in March experienced a dip in business activity as inflationary pressures remained elevated, with Scotland and Northern Ireland the worst affected.
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.
Of the 12 UK regions, only five posted above 50. The average across the UK for March was 51.5.
Commenting on the Tracker’s findings, Sebastian Burnside, NatWest Chief Economist, said:
“According to March’s report, London continued to lead in March, with the South West also making a sizeable contribution to UK economic growth. We saw growth broaden out slightly, as both the South East and Yorkshire & Humber enjoyed renewed upturns in business activity.
“Market conditions remain challenging and recent tariff announcements suggest we could see continued challenges in the coming months.
“Firms up and down the country are looking to control costs, which is feeding through to staffing decisions.
“Price pressures remain high across the board, though they did at least subside slightly in most areas in March, on the eve of the changes to national insurance contributions and national minimum and living wages.”
Demand
The strongest increase in underlying demand in March was seen in the South West, where inflows of new work rose for the first time in four months. New business also grew in London and Yorkshire & Humber, but it dipped in all remaining areas. Northern Ireland registered the steepest fall, but the rate of decline there eased sharply to the weakest in the year-to-date.
Employment
Although employment fell across the board in March, rates of job losses generally eased. Scotland and the South West in fact saw only fractional decreases in workforce numbers. The fastest fall in staffing levels was recorded in the East of England, though the pace of decline there was noticeably slower than the month before.
Capacity
A first decrease in backlogs of work in the North East for six months meant that all 12 UK nations and regions saw a reduction in March. Firms in Wales recorded the most marked drop in outstanding business, followed closely by those in the North West. The latest decline in London was meanwhile only fractional as work-in-hand in the capital came close to stabilising.
Inflation
Rates of input price inflation remained high in March, driven in large part by rising labour costs, though they eased from the month before in the majority of cases. Two of the exceptions were Northern Ireland and Scotland, which saw the quickest increases in firms' operating expenses for 25 and 21 months respectively. Cost pressures were joint-weakest in the East Midlands and South West.
Northern Ireland recorded the steepest rise in average prices charged for goods and services in March, its fastest for two years, but it was one of just three areas where inflation accelerated from the month before. Firms in the South West were the least aggressive with output price increases, followed by those in the North West.
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 March were collected 12-27 March 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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