Survey shows ‘unfavourable divergence’ between north east firms and rest of UK

Governments at Holyrood and Westminster are being urged to make economic growth their top priority in the wake of a new report highlighting the “unfavourable divergence” between Scotland’s north east and the rest of the UK.

Aberdeen and Grampian Chamber of Commerce (AGCC) said its latest quarterly economic survey showed businesses coming under “severe and sustained pressure”.

It added that analysis suggests “much of the region’s underperformance reflects the ongoing contraction in oil and gas” – warning that falling confidence in the sector and delayed investment was impacting supply chains, jobs and spending power in the north east.

The research, carried out together with Gilson Gray LLP – found “concerningly” that just 10% of businesses in the region increased their workforce in the first three months of 2026, with this said to be the “lowest mark since the depths of the pandemic”.

This was “in stark contrast to the UK picture”, where the report said that “despite severe national business headwinds” almost a quarter (22%) of firms had increased their headcount over the period.

Issues around both taxation and business rates are “holding back businesses” in Aberdeen and Grampian, the report added, saying companies in the area “report being under significantly higher cost pressure than UK peers, particularly around labour, utilities, and raw materials”.

In the first three months of 2026 almost a third (32%) of UK businesses reported increased sales but this only happened for 17% of firms in the north east.

Meanwhile almost half (45%) of firms in the region saw sales decrease in the first quarter, compared to 26% of UK businesses.

The report stated: “Businesses overwhelmingly believe that neither the UK nor Scottish Governments have enabled economic growth in the north east of Scotland over the past five years.

The contraction in the oil and gas sector was linked to economic ‘underperformance’ in Scotland’s north east PA Media

“Over 90% rated the UK Government poorly, with similarly negative views of the Scottish Government, highlighting a widespread lack of confidence in policy support for the region.”

AGCC chief executive Russell Borthwick 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 continued: “That is why growth must now become the top priority. Government should be doing everything possible to unlock investment, strengthen confidence and create jobs.”

Adding that there is potentially £17.5 billion of investment in the North Sea which is “reportedly ready to go”, he insisted that “ministers have a major opportunity in front of them”.

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

Findlay Anderson, partner and head of corporate at Gilson Gray LLP, said the survey showed north east businesses “operating in an increasingly difficult environment, where caution is replacing confidence and resilience is being tested”.

Mr Anderson said: “The north east remains one of the UK’s most important economic regions, with world-class strengths in energy, technology and international trade.

“But without greater certainty and a more competitive operating environment, there is a real risk that investment and opportunity will continue to flow elsewhere.

“Rebuilding confidence and creating the conditions for growth must now be a priority.”

Scottish Conservative energy spokesman Douglas Lumsden said: “Out-of-touch SNP and Labour politicians must urgently back these common-sense calls from North East businesses.

“Their reckless policies have decimated Scotland’s oil and gas sector and had a devastating impact on the North East economy.

“Every moment John Swinney and Rachel Reeves sit on their hands, more and more jobs are being lost from the sector.”

A UK Government spokesperson said: “Oil and gas production will be with us for decades to come, and we will manage existing fields for the entirety of their lifespan – while actively scaling up clean energy industries in the North Sea.

“Since July 2024, over £90 billion of private investment has been announced into the UK’s clean energy industries.”

Karen Adam, SNP candidate for Banffshire and Buchan Coast, however 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.

“For as long as Scotland’s energy remains in the hands of Westminster, we will continue to see investment stifled and jobs lost – our natural resources are simply a cash cow to Westminster.

“Scotland is an energy superpower in a prime position to draw investment into our sector to create jobs, enhance our energy security and lower bills for people and businesses – through a fresh start with independence and an SNP Government on Scotland’s side we will back our energy sector and build a wealthier Scotland.”