London tops UK growth table

London businesses recorded the sharpest rise in output among all regions in the UK during August, new figures show.

Data from the Royal Bank of Scotland’s (RBS) latest purchasing managers index (PMI) shows that the capital posted the nation’s top growth rate last month as it continued to benefit from strong gains in new business.

The North East fell from the top spot it claimed in July, dropping to a second-place tie with the West Midlands, which saw its greatest increase in growth since the beginning of 1997.

The East Midlands posted only a marginal increase in output last month was the UK’s weakest performing region.

Despite the growth of activity that was maintained across the UK, RBS said that the rates of expansion last month had slowed from their pace in July.

“This release neatly encapsulates the dilemma faced by the MPC at present: activity may be easing back from the heady pace of early summer, but inflation is picking up,” said Andrew McLaughlin, group chief economist at RBS.

“The slowdown has occurred across the UK, with the West Midlands the only region to buck this trend, notching up a 10-year high in the process. Not since the inaugural month of the regional PMIs, back in January 1997, has the Black Country experienced such bright times.”

Meanwhile, RBS said that inflation has driven input costs rose up at stronger rates in all but three regions, which has caused the national average to reach its highest level in almost two years.

The report said that many companies sought to pass this increase on to customers in a bid to maintain or restore their profit margins.