Job losses are accelerating across the North-east as the impact of the UK Government’s Energy Profits Levy continues to ripple through the region’s economy, according to a new report.
Fresh data from Aberdeen & Grampian Chamber of Commerce and law firm Gilson Gray shows that one in four companies across Aberdeen and Aberdeenshire (25%) cut jobs in the last three months – up sharply from 16% over the same period last year and just 12% in 2023.
The troubling trend reflects growing fragility across supply chains and service sectors as the effects of reduced investment in the North Sea begin to cascade into the wider business community.
AGCC is again urging the Chancellor to scrap the levy in next month’s Budget, arguing that a stable, predictable and fair tax regime is essential to protect jobs and the supply chain required to deliver the energy transition.
The Chamber’s latest Quarterly Economic Survey (QES) – the region’s most comprehensive measure of business sentiment – shows confidence, sales and profitability all deteriorating.
The survey, carried out between 18 August and 12 September, gathered responses from 137 organisations employing more than 15,000 people across the region. It paints a picture of a business community still reeling from the impact of punitive taxation and policy uncertainty.
Across almost every key indicator, the North-east continues to lag behind the rest of the UK. Domestic sales are falling for 44% of local businesses – the lowest reading since early 2021 – and confidence in future turnover and profitability remains well below national levels.
Taxation has overtaken inflation as the number one concern for North-east businesses, with a record 77% of firms identifying it as a key barrier to growth – almost 20 points above the UK average. Employers consistently highlight the Energy Profits Levy, National Insurance rises and wider fiscal instability as the biggest obstacles to growth.
Just a third (34%) of North-east businesses expect turnover to rise over the next 12 months, compared with nearly half nationwide. Almost one in two (46%) expect profitability to worsen – clear evidence that the region is being disproportionately affected by government policy and the decline in North Sea investment.
Russell Borthwick, Chief Executive of Aberdeen & Grampian Chamber of Commerce, said: “This data shows a region that is holding its breath ahead of the Budget. Businesses are exhausted by constant policy shocks, rising costs and a tax regime that punishes enterprise.
“The Energy Profits Levy is driving away investment, undermining confidence and now threatening jobs – with one in four companies across our whole economy, not just energy, reducing headcount.
“The Chancellor must use this Budget to scrap the EPL and replace it with a predictable, long-term framework that supports the UK’s oil and gas sector and enables a just transition.
“The North-east remains the engine room of the UK’s energy economy – but that engine is running on empty. We need stability, skills and stimulus, not surprise. Otherwise, the gulf between our region and the rest of the UK will only grow wider.”
Findlay Anderson, Partner and Head of Corporate at Gilson Gray, which sponsors the QES, added: “The North-east’s current economic state is not about capability – it’s about confidence. The fundamentals are still here: world-class skills, energy expertise, and a growing ecosystem of innovation around transition technologies.
“Yet businesses are increasingly struggling to translate that potential into growth because the conditions to plan, invest, and believe in the future continue to be impacted by policy and regulation.
“The Energy Profits Levy has lingered long enough to erode investor confidence across the regional and national energy system and beyond. Combined with shifting fiscal signals and a patchwork of local and national regulation, it has created a landscape in which businesses cannot plan with confidence — and without confidence, capital stays on the sidelines, or worse still finds new markets for investment elsewhere.”
The Chamber says the results highlight the urgent need for a clear, long-term economic strategy that restores confidence and incentivises investment in energy, infrastructure and people.
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.
Click here to read the report