Aberdeen businesses warn of 'growing gap' between North East and UK amid North Sea shutdown fears

A gloomy economic picture in Aberdeen has been blamed on government policy decisions | PA

Business leaders have warned a failure to back the North Sea oil and gas sector is creating an economic gap between the North East and the rest of the UK.

North East businesses have warned of a “clear and growing gap” between the region and the rest of the UK because of government failure to support the oil and gas sector causing “sustained pressure”.

Aberdeen and Grampian Chamber of Commerce’s latest quarterly economic survey (QES) paints a picture of businesses facing weaker demand, falling cash flow, reduced investment and subdued hiring intentions across the region.

A gloomy economic picture in Aberdeen has been blamed on government policy decisions | PA

Analysis suggests much of the region’s underperformance reflects the continuing contraction of the North Sea oil and gas industry, with falling confidence and delayed investment hitting supply chains, jobs and spending power across the North East.

Business leaders have argued that £17.5 billion pipeline of potential North Sea investment, an offer made directly to Labour Chancellor Rachel Reeves by operators earlier this month, demonstrates that growth can be unlocked quickly if the right policy choices are made. AGCC has claimed this would provide major benefits for jobs, energy security, supply chains and public finances.

The latest quarterly survey reveals that just 15 per cent of North East firms reported increased domestic sales in the first quarter of 2026, compared with 32 per cent across the UK. Almost half of the firms surveyed said they expect sales or orders to decline in the months ahead.

The study also indicates that financial pressure is intensifying. A total of 46 per cent businesses in Aberdeen and Aberdeenshire reported declining cash flow over the past three months – the highest level since 2021 and substantially worse than the UK average of 32 per cent.

The tougher trading environment is now appearing to feed directly into business decisions on jobs and investment. Just 10 per cent of North East firms increased staffing in the first quarter of the year, while almost a quarter reduced headcount. More firms expect to cut jobs than grow their workforce – in marked contrast to the wider UK picture.

Businesses overwhelmingly believe that neither the UK or Scottish governments have enabled economic growth in the North East over the past five years, while almost three quarters say Scotland’s current business rates system is not fit for purpose.

Chancellor Rachael Reeves' policy decisions have sparked criticism from businesses in Aberdeen and the North East, particularly in relation to the oil and gas industry | Getty Images

Russell Borthwick, chief Executive of Aberdeen and Grampian Chamber of Commerce, said: “This latest survey continues to tell a cautionary and concerning story of the North East economy, with results once again showing a clear and growing gap between our region and the rest of the UK.

“While businesses across the country are facing headwinds, the scale of divergence we are seeing here points to something structurally different. Weak demand, worsening cash flow, lower investment and falling employment are not isolated indicators – together they paint a picture of a regional economy under sustained pressure.”

Mr Borthwick argued that the research shows “growth must now become the top priority”.

He added: “Governments should be doing everything possible to unlock investment, strengthen confidence and create jobs.

“With £17.5 billion of potential North Sea investment reportedly ready to go, ministers have a major opportunity in front of them.

“Grabbing that opportunity would support employment, boost supply chains, improve energy security and generate substantial value for the wider UK economy.”

The SNP's Karen Adam | PA

Karen Adam, SNP candidate for Banffshire and Buchan Coast, said: "Time and time again, the Labour party has led Scottish industry and workers up the garden path only to betray our energy sector and risk energy security, jobs and prospects of a clean energy transition.

“Labour's tax on Scotland's energy is hammering Scotland and especially the North East where we have seen promise after promise broken leaving our workers, our industry and Scottish bill payers to pick up the pieces.”

The UK government was contacted for comment.

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