A think-tank says new figures showing the depth of the economic downturn in Aberdeen since oil prices crashed in late 2014 highlight the risks of the city’s dependence on the oil and gas industry.
The recent Cities Outlook 2018 report, published by the London-based Centre for Cities (CfC), featured both positive and negative aspects of the Granite City economy.
CfC researcher Sania Haider has followed that up with a more in-depth analysis of what is going on in Europe’s oil and gas capital.
Her findings are in tune with what north-east business chiefs have been saying since the onset of a downturn which, thankfully, now appears to be over.
In particular, economic development body Opportunity North East has been striving to build a new future for Aberdeen city and shire which is not so heavily dependent on the offshore oil and gas industry.
Ms Haider said: “Aberdeen has long been one of the UK’s most economically buoyant cities.
“In the 11 years that Centre for Cities has published Cities Outlook – our annual health-check on UK city economies – Aberdeen has ranked among the best performing cities when it comes to wages, skill levels and innovation.
“However, the downturn in the city’s standing in a number of key areas in recent years suggests that all may not be well in the Granite City’s economy.
“While Aberdeen’s reliance on oil and gas appeared to shelter the city from the worst of the global financial crisis, the oil sector’s recent turbulence has pulled the city into reverse at a time when other cities have been slowly improving.”
Aberdeen’s “large reliance” on one sector and how it responds to the downturn, including through diversification, will deliver key lessons for local and government industrial policy, Ms Haider added.
Business chiefs across the north-east are trying to diversify the region’s economy and move it away from oil and gas dependence towards a broader mix of industries.
Sectors such as food and drink have for decades been overshadowed by what happens offshore, where oil company profits have dictated the path of growth.
Aberdeen and Grampian Chamber of Commerce chief executive Russell Borthwick said: “Our economy is at a crossroads. Businesses of all shapes and sizes are adjusting to a new norm but it is one that is still the envy of many places in the UK today.
“The region is a hive of activity and industry, punching above our weight in terms of business, innovation, quality of life, education and tourism.
“We also have a very strong platform from which to move forward. We have an economic diversification plan that is gathering pace, our strength in innovation is being further developed through City Region Deal investment, there is real momentum behind the city centre masterplan and most of all we are beginning to demonstrate confidence and ambition.
“What we need to get better at is letting people beyond the oil sector know we are open for business and celebrating all the things that already make the north-east a great place to live, work, study, visit, invest and do business, while painting a clear picture of what the future could look like.”
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