The Scottish private sector economy decelerated last month at its steepest rate in over a decade, as the gap widened between the slowest and fastest declining economic regions of the UK.

Business activity in Scotland in August was at its lowest level in the 10-year life of the Royal Bank of Scotland purchasing managers' index, the bank says in its survey published today.

While London and the north-west of England recorded rises in output and eight out of 10 English regions saw activity bounce back from early summer levels, only Northern Ireland posted a lower activity score than Scotland, which declined at its fastest rate in the index's history.

The survey raises questions about the resilience of the Scottish economy, which First Minister Alex Salmond said on Friday was "outperforming the rest of the UK" with both exports and high street spending remaining robust, while the CBI director-general, Richard Lambert, told The Herald on Saturday that Scotland looks better placed to come through a slowdown than in the past.

The Royal Bank's head of group economics, Stuart Porteous, commented: "While output for the UK as a whole contracted for the fourth successive month, the gap between the fastest and slowest-growing regions widened to the greatest since data were first available."

Overall, the rate of decline eased for the second successive month, according to the index which takes the regular pulse of business through the reports of purchasing managers. But Scotland, which had in the second quarter of 2008 slipped sharply from seventh to 11th out of 12 economic regions, remained one from bottom in August. Its activity level of 41.9 (where 50 is no change) was down from 52.6 in the fourth quarter of 2007, when the north-west of England led the way on 57.3 and London was second on 53.8. Eight months later, the north-west has slipped only to 54.2 and London to 51.2, in stark contrast with the 10.7- point fall in Scotland.

In employment, Scotland has improved its relative position in the league table, from eighth at the end of last year to fifth, its index level easing from 48.7 at the end of the second quarter to 47.0.

But there was a record steep fall in incoming new business in Scotland, its index rating slumping to 38.9 last month from 45.5 at the end of June, and similarly in work backlogs, with a drop from 44.3 to 38.4 and a fall in its position from second to 10th.

Meanwhile small and medium-sized businesses are taking action to cut costs and preserve cashflow as the fear of a serious downturn takes hold, according to a survey of 500 SMEs by accountants and advisers MacIntyre Hudson.

It found 55% worried that conditions in their own business have become more difficult compared to last year, 75% controlling expenditure more strictly and 30% reducing headcount Atul Kariya, principal at MacIntyre Hudson, said: "Our survey shows that almost a third of companies are already, at this stage of the cycle, reducing their headcount. In today's service economy, labour is the biggest cost in many businesses. While costs must be kept under control, it is important to avoid downsizing in such a panic that the ability to deliver is compromised."

Nearly a third of owner-managers are working longer hours as a result of the downturn, while 27% expect their personal earnings to decline, and 28% say the downturn will delay their exit or retirement by up to five years - but only 13% wish they could have exited sooner.