A new independent report has mapped out a Regional Economic Strategy for Aberdeen with a focus on productivity, diversification, and infrastructure investment to support a resilient and balanced economy for the region.
The 2026 Economic Policy Panel Report makes nine recommendations and highlights a need to diversify to bolster resilience, with recent and ongoing investments in tourism infrastructure, digital connectivity, hospitality, science facilities, and energy transition projects all moves in the right direction.
The Aberdeen Economic Policy Panel was started in 2017 to provide independent review of the performance of the North-east economy.
The Panel has been made up of professionals from industry, academia, and the public sector to assess the current economic position of the region, and the longer-term priorities that influence performance.
The report states the economic outlook for the region remains "fraught with uncertainty and challenges" driven by global and domestic factors.
It adds: "The region has faced a series of shocks, including the lingering effects of the Covid-19 pandemic, geopolitical tensions, energy market volatility, and economic policy uncertainties. The combination of these factors serves to further underline the significant structural economic challenges that the region faces.
"The nature and scale of these challenges require that policy should remain focused on the long-term factors that underpin sustainable economic prosperity and productivity improvements, and the strategic regional actions that provide opportunities for growth.
"Key to this long-term success will be economic diversification both within the energy sector and outside it to produce greater economic resilience.
"This must be supported by further progress on developing foundational elements like skills, infrastructure, innovation and the natural environment, enhancing the region’s attractiveness as a place to live and invest.
"The Panel continues to focus on these themes, informed by discussions with stakeholders and business leaders, to encourage sustainable productivity-led economic growth for the North-east.
"The 2026 set of recommendations build on the progress made on the Panel’s previous recommendations and with regard to the analysis in this report set out what is needed to help achieve long-term success."
Read the nine recommendations in full below:
1. The Regional Economic Strategy sets out that “Our vision is for a regional economy that enables us to thrive. It is leading a just energy transition, diversifying our economy, enabling entrepreneurship and innovation, and delivering a wellbeing economy for our people –a post fossil-fuel future.” This has progressed one of the Panel’s key recommendations in its previous report. However, further progress is needed to ensure that this vision is distilled into a clearer proposition for Aberdeen’s liveability – why it is the city people should choose to live, work and invest. This proposition should have the profile necessary across all stakeholders to unify the key strategies and masterplans behind it. In an increasingly competitive marketplace, all stakeholders in Aberdeen need to articulate this proposition more confidently so Aberdeen can clearly set out what separates it from other cities.
2. The Panel’s last report highlighted slow progress on the Regional Economic Strategy and the need for greater impetus behind it. Good progress has been made since then and the plans to deliver a SMART action plan and Route Map this year are overdue and need to be delivered in the first half of 2026. The significant structural economic challenges facing the region set out in this report still require an increased focus on delivery at pace throughout the life of the strategy. A laser-like focus on productivity improvements is required both in terms of the strategic fundamentals outlined in this report but also in creating the conditions for business level gains through innovation, new technology and investment. This would be helped by a new and clearer, formalised governance model for the Regional Economic Partnership (REP). The emerging Scottish Government legislation on regional partnerships means that there is an ideal opportunity in 2026 to strengthen the delivery model in the region.
3. This report highlights the vital role that diversification – both within the energy sector and outside it – has in building a more resilient and balanced economy for the future. The current sectoral approach to diversification set out in the RES was established in the original regional economic strategy in 2016 and it is vital that the approach continues to focus on sectors where the region has a competitive advantage and ability to build on strong foundations. The many economic changes that have occurred over this period mean that the setting out of the action plan for the RES provides an ideal opportunity to include a full review of the sectoral approach in 2026. This can assess existing and other potential growth sectors against clear criteria that ensure it is focusing on the sectors where the region has the underlying strengths, skills, investment and opportunity to deliver significant economic impact.
4. Infrastructure investment has played a vital role in the region’s progress in recent years and will continue to be critical for the successful transition of the regional economy. The Panel’s previous recommendation for the development of an infrastructure investment plan – covering both public and private funding - to support the key components of the RES is in early development and remains a priority given the challenging financial environment. The Panel encourages further progress in 2026 to ensure that this prioritises the key investment requirements to underpin Aberdeen’s vision and liveability, appraises options, sets out funding opportunities and clear timescales. This requires a new regional investment model capable of pooling and leveraging funding from the many sources across the public and private sectors that should be an integral part of the new model for the Regional Economic Partnership.
5. The progress made on the development of the Regional Skills Strategy with a new action plan and SMART objectives is welcome. The action plan has still to be signed off by the Regional Economic Partnership and Aberdeen City Council suggesting this critical issue for the local economy still requires continued emphasis. It is therefore essential that the Skills Strategy is fully integrated into the RES in short order this year and aligned with the RES objectives, so progress on skills development can start at pace.
6. The Panel has previously called for bold decisions to support an accelerated Just Transition toward new and green energy. There has been further positive development with progress on the Energy Transition Zone, the UK Government’s decision to locate both the Department for Energy Security and Net Zero and GB Energy headquarters in Aberdeen and the city’s active engagement with the Just Transition Commission. Nonetheless, the uncertainty about UK policy has increased and the Panel heard from many stakeholders that the accelerated decline in oil and gas activity and job losses this has perpetuated has moved out of sync with the development of new opportunities through renewable energy. There is an urgent need for a coherent plan for energy transition in the UK with realistic timescales and in keeping with UK Climate Change Committee advice. The Panel urges cross-government working - particularly between the UK and Scottish Governments - to deliver a more certain and managed just transition that delivers both our net zero targets and new economic opportunities in the region.
7. Continued progress on the Aberdeen City Centre and Beach Masterplan is essential for the city to deliver on its vision. In addition, it is vital that the development of the Local Development Plan for 2028 which is underway gives the necessary emphasis to the scale of economic transition needed across the city. Land use and planning has to be at the centre of that transition and ensure coordination across industrial, infrastructure and housing developments. The LDP economic theme should be developed further to ensure that it complements the RES with due emphasis on the planning and land use change necessary for a more productive and diversified economy. The second theme on addressing climate change and the nature crisis must also dovetail with the RES and support the important and fundamental role the natural environment plays in sustainable prosperity. This complementarity and join up is vital for the transition, for improved liveability and for Aberdeen to have the flexibility to address the structural challenges the economy faces.
8. The constrained financial position requires the strategic approach to have continued focus on mediumterm financial sustainability and risk management, and affordable infrastructure investment planning. It also places even greater emphasis on ensuring existing funding delivers maximum benefits and new funding opportunities are advanced. The North East’s designation as an Investment Zone is being integrated into the Regional Economic Strategy and in line with the Panel’s previous recommendation that it supports the region’s focus on the energy transition and other key sectors. However, the process in unlocking the funding associated with the new status is long and this means that the region has still to unlock the main benefits. It is also important that planning and implementation of new funding like this ensure it delivers effectively for the region, guarding against the risk that funding supports activity that would have happened anyway or simply displaces activity from elsewhere in the region. The level of funding in itself is not going to be enough to deliver the scale of change needed in the local economy and new funding mechanisms will need to be identified and developed as part of the new regional investment model required in recommendation 4.
9. It is clear that access to more funding and in particular from the private sector will be necessary for the city to achieve its ambitions. The Panel have previously echoed the findings of the Economy and Fair Work Committee Report about the economic development funding landscape being cluttered and lacking clarity. We share their recommendation “that the Scottish and UK governments set out how these other funding initiatives interact with growth deals and establish a clear pathway for growth deals and stakeholders to use to navigate the cluttered funding landscape” and that “Given the imminent end-point for some deals, now is the time to consider what comes next”. The Panel supports these conclusions and recommendations, not least because this clarity is essential to be able to deliver on the recommendations regarding the new models for the Regional Economic Partnership and regional investment.