Business confidence in the North-east has fallen to its weakest level since the height of the Covid pandemic, as firms grapple with declining sales, rising costs and sustained policy pressure, according to a new report.
Fresh data from Aberdeen & Grampian Chamber of Commerce and law firm Gilson Gray shows the regional economy continuing to diverge sharply from the rest of the UK, with businesses reporting worsening outlooks on sales, investment, staffing and profitability.
The Chamber’s latest Quarterly Economic Survey (QES) reveals that just 14% of North-east firms reported increased sales in the final quarter of 2025 – less than half the national figure – while nearly half expect orders to fall in the months ahead.
The deteriorating trading environment is now feeding directly into workforce decisions. The number of firms cutting jobs has risen steadily through 2025, with the region recording its lowest level of employment growth since 2020. Looking ahead, more than a quarter of North-east businesses expect their workforce to shrink as we head into 2026 – in stark contrast with the UK as a whole.
Confidence in future revenues has also weakened significantly. Fewer than one in four North-east firms expect turnover to grow this year, while almost 40% anticipate a decline – the worst outlook since the depths of the pandemic. Half of businesses are forecasting falling profits, nearly 20 percentage points worse than the national position.
Taxation remains firmly the number one constraint on North-east businesses- with firms citing the cumulative impact of the Energy Profits Levy- and lingering inflationary pressure as the major barriers to growth. Cost pressures remain challenging, particularly around labour and utilities, and cashflow continues to deteriorate faster than elsewhere in the UK.
Despite the negative headwinds, the survey shows North-east companies continue to outperform national averages on export activity, highlighting the strength of the region’s internationally focused supply chain. However, the Chamber warns this partly reflects the growing offshoring of energy-related resources as domestic investment and activity is declined prematurely.
Aberdeen & Grampian Chamber of Commerce is again urging the UK Government to urgently reassess its approach to taxation and wider energy policy, arguing that the current framework is undermining confidence, accelerating job losses and weakening the supply chains required to deliver the energy transition.
Russell Borthwick, Chief Executive of Aberdeen & Grampian Chamber of Commerce, said: “This report shows a region under sustained pressure and running out of road. Confidence has drained away quarter by quarter, and we are now seeing the real-world consequences of the Energy Profits Levy on jobs, investment and future growth prospects. Not just in oil and gas businesses but across all sectors and business types here.
“The North-east is being hit harder than any other part of the UK, not because of a lack of ambition or capability, but because policy decisions are actively working against the businesses that underpin our economy, not dissimilar to what we saw in mining communities in the 1980s.
“When fewer than a quarter of firms expect revenues to grow and a third say survival is their main priority, something is fundamentally wrong. The government must recognise the damage being done and act quickly to replace the Energy Profits Levy (EPL) with the agreed successor regime in 2026, not 2030.”
Findlay Anderson, Partner and Head of Corporate at Gilson Gray, sponsors of the QES, added: “The message from businesses is consistent and increasingly stark. Uncertainty is paralysing decision-making and forcing firms to become defensive rather than ambitious.
“The North-east still has extraordinary strengths – in energy, innovation and export capability – but confidence is being eroded by an environment in which businesses cannot plan with certainty.
“Without a clearer, more balanced policy framework, the risk is that caution today becomes permanent loss tomorrow, with investment and talent flowing elsewhere. Rebuilding confidence must now be an economic priority.”
The Quarterly Economic Survey, delivered locally by Aberdeen & Grampian Chamber of Commerce and nationally coordinated by the British Chambers of Commerce, is recognised by the UK Government, HM Treasury and the Bank of England as a key indicator of business performance and sentiment.