Aberdeen is forecast to experience the lowest economic growth of any UK city from 2025 to 2028, according to a new report by EY.
The city is expected to see an average annual gross value added (GVA) growth of just 0.9%, significantly below the UK average of 1.6% for the same period.
The primary reason for this slow growth is the contraction in the energy sector, particularly the decline in North Sea oil production. Moray Barber, EY’s Senior Partner for Aberdeen, emphasised that recent policies have hindered investment in the region.
He noted: “A damaging windfall tax on energy firms has been extended and increased, despite windfall conditions no longer existing. The result has been investment decisions paused indefinitely, thousands of jobs lost and business confidence at its lowest ebb.”
Furthermore, Aberdeen is also facing limited growth in professional services, which further exacerbates its economic challenges. The city’s unique exposure to the decline in oil and gas extraction means that new investments in renewable energy have yet to fully replace the lost activity and employment.
Fergus Mutch, Policy Advisor for Aberdeen & Grampian Chamber of Commerce, highlighted the broader impact of these policies on the region.
“Regrettably, recent years of poor policymaking and a punitive North Sea tax regime has put a stranglehold on growth,” Mutch said, emphasising the need for a well-managed energy transition to support economic growth.
In contrast to Aberdeen, Glasgow is forecast to expand at an average annual pace of 1.6% between 2025 and 2028, while Edinburgh is projected to grow at an average annual rate of 1.7% over the period.
Average annual growth in the UK is projected at 1.6%.
EY said: “Among Scottish cities, Edinburgh stands out with a robust forecast for GVA (gross value added) growth in knowledge-intensive sectors, particularly professional, scientific, and technical activities, which are expected to grow by an average 1.9% annually.”
Despite these challenges, Aberdeen has seen some positive developments, including investments in new infrastructure and potential projects that could attract private investment. However, these efforts may not be enough to offset the current economic downturn without significant policy changes.
