Call for growth to seize £17.5bn North Sea opportunity

The call comes as the chamber’s latest Quarterly Economic Survey (QES), delivered in partnership with Gilson Gray LLP, shows North-east businesses under severe and sustained pressure, with weaker demand, weakening cash flow, reduced investment and subdued hiring intentions across the region.

Analysis suggests much of the region’s underperformance reflects the ongoing contraction in oil and gas, with falling confidence and delayed investment hitting supply chains, jobs and spending power across the North-east.

AGCC said the £17.5bn pipeline of potential North Sea investment – an offer made directly to Chancellor Rachel Reeves by operators earlier this month – demonstrates that growth can be unlocked quickly if the right policy choices are made, with major benefits for jobs, energy security, supply chains and public finances.

The latest QES 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 expect sales or orders to decline in the months ahead, underlining the fragile state of regional demand.

Financial pressure is also intensifying. Almost half of businesses in Aberdeen and Aberdeenshire (46 per cent) 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.

At the same time, firms continue to face stronger cost pressures than elsewhere in the country. Labour costs remain the single biggest challenge, cited by 86 per cent of respondents, alongside utilities and raw materials. Taxation remains the leading barrier to growth, while concern over business rates has surged sharply following the latest revaluation process.

The tougher trading environment is now feeding directly into business decisions on jobs and investment. Just 10 per cent of North-east firms increased staffing in Q1, while almost a quarter reduced headcount. Looking ahead, more firms expect to cut jobs than grow their workforce – in marked contrast to the wider UK picture.

Just 29 per cent of North-east businesses expect turnover to improve over the next 12 months, compared with 49 per cent nationally. Only 22 per cent expect profitability to improve, while 43 per cent believe profits will worsen – highlighting a substantial confidence gap between the region and the rest of the UK.

The survey also points to deep frustration with public policy. Businesses overwhelmingly believe that neither the UK government nor Scottish Government has 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.

Findlay Anderson, partner and head of corporate at Gilson Gray LLP, said: “These findings show businesses operating in an increasingly difficult environment, where caution is replacing confidence and resilience is being tested.

“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.”