The latest North-east Quarterly Economic Survey, published by Aberdeen & Grampian Chamber of Commerce in partnership with Gilson Gray LLP, offers a stark but familiar diagnosis: the region’s economic future remains fragile, confidence is eroding, and the policy environment is doing little to help.
Sadly it seems 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.
Policy uncertainty inevitably leads to investment paralysis
For much of the past five years, inflation and interest rates were the main drivers of business anxiety. However the current enemy of growth is policy uncertainty with a record number of North-east businesses citing taxation and government-driven costs as their greatest constraint — well above national levels.
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 result is clear throughout the survey: falling sales, reducing order books, and cautious hiring. But more troubling from an investment perspective - firms are holding back on training, technology, and expansion not because they lack ambition, but because they cannot see a stable horizon.
For a region defined by its ability to take long-term bets - on new energy plays and on engineering and technology - this represents a disturbing and ongoing picture. If the North-east is to recover its momentum, policy clarity must become a competitive advantage, not a casualty of short-term politics.
Regional divergence and the confidence gap
A key takeaway from the QES is the widening gap between the North-east and the rest of the UK. Across the country, nearly half of firms expect turnover to rise over the coming year. In the North East, only a third do. Even fewer anticipate higher profits. This divergence matters because it speaks to the risk of regional imbalance.
The North-east has historically been a driver of national prosperity. Today it risks becoming an outlier of underperformance. And the irony is that the very policies designed to accelerate the energy transition — policies that should be empowering this region to lead — have arguably become the main contributors to its slowdown.
Holding out for a smarter transition
The North-east continues to embrace the global energy transition, diversifying into offshore wind, hydrogen, carbon capture and more. The challenge is not a lack of direction, but a lack of alignment between ambition and policy. What businesses need is not more or less transition, but a smarter one: a framework that rewards investment in ongoing and balanced decarbonisation rather than penalising it through tax and regulatory uncertainty. With the right incentives and policy framework, this region can remain a global energy capital powered by a mix of energy technologies and by confident enterprise.
Confidence is key
Businesses want to invest in Aberdeen and the region’s renewal; but they need to know that the investment will be met with stability and partnership. The North-east needs a reset — one that prioritises predictability over short-term politics, long-term competitiveness over short-term gain, and a clear understanding that sustainable growth is built on confidence, not constraint.
Confidence is not only a consequence of success. It’s also the starting point. And it’s the one commodity the North-east cannot afford to run out of.