Warning economic recovery could be hampered by Brexit and further Covid restrictions

FURTHER lockdown restrictions, Brexit and the end of the furlough scheme could limit economic recovery, a leading banking figure has warned.

Manufacturing and service sector firms are on the Covid-19 bounceback, according to the headline NatWest South West Business Activity Index.

Output has now risen for two successive months – indicating a further recovery from the economic impact of the outbreak.

But there are a number of challenges on the horizon, warned Paul

Edwards, chairman of NatWest South West Regional Board.

He said: “The latest PMI data suggest that business conditions across the South West continued to recover in August following an easing of Covid-19 restrictions and the reopening of the economy. The sharp increases in both activity and new orders are welcome news after the severe drops at the height of the pandemic, but there remain a number of challenges to the outlook that could curb the recovery.

“The end of the government furlough scheme in October, worries over second waves of infections and the reintroduction of lockdown measures, as well as whether the UK will secure a Brexit deal are all factors that could limit any bounceback in the coming months.”

The index – which measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – stood at 59.3 in August, down from a six-and-a-half-year high of 59.7 in July, to signal a further marked increase in overall business activity across the region.

The amount of new work received by South West private sector firms expanded for the second month running in August.

Despite easing from July’s 43-month high, the rate of growth remained sharp and was quicker than the series average.

Anecdotal evidence indicated that the easing of Covid-19 lockdown measures and the release of pent-up customer demand had helped to lift sales.

New orders also rose markedly across the UK as a whole in August, with the rate of expansion accelerating since July.