Local lockdowns could derail economic recovery

Scotland’s economy is “approaching stabilisation” but there are fears a rise of local lockdowns could delay recovery, a new report suggests.

A business study by the Royal Bank of Scotland Purchasing Managers’ Index (PMI) found the Covid-related downturn in the private sector “eased noticeably” in July.

The report’s Business Activity Index registered 49.3 in July, up from 37.1 in June.

It also found the softest fall in private sector output since March.

While private sector firms reported a reduction in new business in July, confidence strengthened to a five-month high.

The optimism is linked to hopes of an economic recovery once lockdown measures are lifted, the report suggested.

However it reported a reduction in Scottish private sector employment for the sixth month in a row.

Malcolm Buchanan, chairman of the Scotland board at Royal Bank of Scotland, said the July data shows some encouraging signs.

But he warned that while July’s figures “are a significant step in the right direction, we are still yet to see growth”.

He added: “A possible ‘second wave’ of the pandemic and reintroduction of lockdown measures in regions such as Aberdeen has the potential to derail any further moves towards a recovery.”