Economic Overview

North east Scotland contributes substantially to both the Scottish and wider UK economy with Gross Value Added (GVA) of £18bn and 284,000 jobs (2013). The region has consistently exceeded its own economic growth target of 2.5% per annum.

However, significant under investment in infrastructure, both physical and digital, a high cost of living and an economy dominated by oil and gas have combined to present us with a major challenge.

Our oil and gas industry will recover from this price downturn, albeit not to the activity levels we have seen in the UKCS in the past. In 1999, at the height of our production, we were producing 4.6m barrels of oil equivalent per day. In 2016, it is about 1.6m barrels per day, but is forecast to reduce to 1m by 2030; 500,000 in 2040 and 200,000 barrels by 2050, as per figures from Professor Alex Kemp, the recognised expert from the University of Aberdeen. So 2050 is only 12% of our current production and spells out the very clear economic challenge for our region.

The current downturn in oil and gas that began in 2014 cast the issues we face into sharp relief. There are essentially two visions for the future: the Renaissance which sees us revitalise the region’s economy or the slow decline towards becoming a Museum for the golden age of North Sea oil and gas.

Recognising these challenges and the opportunities ahead, the Regional Economic Strategy – published in December 2015 by Aberdeen City Council, Aberdeenshire Council and Opportunity North East – produced a vision and strategy for the future of the economy. This focuses on four key strands: investment in infrastructure; innovation; inclusive economic growth; and internationalisation.

ONE intends to capitalise on existing strengths and potential to support maximising the oil and gas opportunity for the region while broadening the economy with investment in food, drink and agriculture, life sciences, tourism and digital and entrepreneurship.

With the private and public sectors working together, we can realise our shared vision of North East Scotland remaining a major economic driver for Scotland and the UK.