One in four companies in the North-east have reduced headcount as Energy Profits Levy continues to erode confidence across supply chains
Job losses are intensifying across Aberdeen and Aberdeenshire as the ripple effects of the UK Government’s Energy Profits Levy extend beyond the oil and gas sector into the wider regional economy, according to fresh analysis released ahead of the Autumn Budget.
Twenty-five percent of companies across Aberdeen and Aberdeenshire eliminated positions in the three months to September, marking a sharp escalation from 16% during the same period in 2024 and just 12% in 2023, according to the latest Quarterly Economic Survey from Aberdeen & Grampian Chamber of Commerce and law firm Gilson Gray. The troubling trajectory reflects mounting fragility across supply chains and service sectors as reduced investment in North Sea operations cascades through the broader business community.
The survey, conducted between 18 August and 12 September, gathered responses from 137 organisations employing more than 15,000 people across the region. It reveals a business community confronting what the Chamber describes as “punitive taxation and policy uncertainty”.
In a significant shift, taxation has displaced inflation as the foremost concern for North-east businesses, with a record 77% of firms identifying it as a barrier to growth – almost 20 percentage points above the UK average. This mirrors a broader national trend, where taxation has emerged as the second-highest business concern across the UK, according to separate data from the British Chambers of Commerce.
Employers consistently cite the Energy Profits Levy, National Insurance increases, and wider fiscal instability as the principal obstacles to growth. The levy, which increased the headline tax rate on North Sea production to 78% in November 2024, has become a focal point of industry criticism.
Across almost every key indicator, the North-east continues to trail the rest of the UK. Domestic sales are declining for 44% of local businesses—the lowest reading since early 2021—while confidence in future turnover and profitability remains substantially below national levels.
Just 34% of North-east businesses anticipate turnover growth over the next 12 months, compared with nearly half nationwide. Almost one in two (46%) expect profitability to deteriorate—evidence the region is being disproportionately affected by government policy and declining 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 Quarterly Economic Survey, 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”.
Budget Speculation and Industry Proposals
Recent reports suggest Chancellor Rachel Reeves is considering ending the windfall tax in March 2029, one year earlier than the current expiry date of March 2030. Treasury officials are understood to be seeking assurances from oil and gas companies that early removal would translate into new investment and job creation in the North Sea.
The Aberdeen & Grampian Chamber of Commerce has called for the levy to be scrapped entirely, arguing that “a stable, predictable and fair tax regime is essential to protect jobs and the supply chain required to deliver the energy transition”.
Aberdeen and Aberdeenshire, with a population where nearly one in 30 working-age individuals is employed in or supports the offshore energy industry, faces substantially greater exposure to North Sea policy than the UK average of approximately one in 220.
The Budget is scheduled to be delivered by Chancellor Rachel Reeves on 26 November 2025, though early reports suggest significant decisions affecting the Energy Profits Levy may be announced.
