Independent report underlines optimistic outlook for Aberdeen economy
The first annual report by the independent panel formed to advise on the Aberdeen city region’s economic performance has cited an outlook of “cautious optimism” and highlighted the potential for growth in the years ahead.
The report was launched today (2 November) at the inaugural State of the Cities Conference, hosted by Aberdeen City Council.
The Council formed the Economic Policy Panel in 2017 with a remit of evaluating and advising on the economic performance of the city and the region.
A national recruitment exercise led to the appointment of a panel of specialists who have set out their findings against the backdrop of the challenges the region faced due to the fall in global oil prices from 2014 and the measures taken in response.
The Economic Policy Panel report, co-authored by Dr Hanan Morsy and Douglas Peedle, notes:
- The North-east economy is emerging from a difficult economic period with the potential to return to moderate growth in the coming years;
- The Panel heard consistent evidence of cautious optimism and signs that economic conditions were gradually improving;
- GVA per head in Aberdeen remains the highest in Scotland;
- The region continues to perform strongly in export markets, with around 21% of the value of Scottish exports coming from the North-east;
- Emerging signs of improvement in the labour market, with employment rates recovering and rising from 70% in Aberdeen in 2016 to 76% in 2018;
- The first rise in the number of jobs being supported by the UK offshore oil and gas sector since the downturn in 2014, increasing to 282,700 in 2018 from 280,000 in 2017;
- Stability returning to the local property market, suggesting the decline in house prices may have bottomed out;
- Independent growth forecasts of between 1-1.5% per annum until 2020, against the Scottish range of 0.85-1.7% and the UK range of 1.4-2.0%.
Whilst highlighting the positive trends in the local economy and strength of the economic fundamentals, the Panel also drew attention to challenges on a regional and national level.
These include the potential impact due to Brexit on business confidence and investment and uncertainty around the ability to recruit EU nationals and access to EU markets for imports and exports.
An ageing population, bringing increased demand for health and social care as well as a slow down in the growth of the working age population in future years, was also flagged in the report alongside the importance of technological change, the need to increase productivity and the future of the oil and gas sector.
The importance of inclusive economic growth - enabling as many people as possible to contribute to and benefit from growth – is also at the heart of the report and was the focus of the keynote addresses at today’s conference.
Cllr Jenny Laing, Co-Leader of Aberdeen City Council, said: “The report represents an independent assessment of the health of the city region’s economy and I welcome the positive findings. As a Council we share the optimism the authors have outlined and are positive about the economic prospects for Aberdeen in the years ahead.
“We also acknowledge the challenges as we face a crossroads in our economic planning. The next stage in our journey is to look at what we need to do, collectively and collaboratively, to maintain the Aberdeen City Region’s contribution to UK and Scottish economic growth.
“We must also recognise that the city’s economic success has not necessarily benefited everyone living here. We are not unusual in that respect - but today has provided a platform to focus on a new approach, where we align our investment in the city’s infrastructure with our investment in our social infrastructure to better respond to the needs of the people and place.
“I am encouraged by the work that is being done through our own Regional Economic Strategy’s Inclusive Economic Growth programme and by Aberdeen City Council as an organisation. To build on this, we will continue to push for greater devolution of powers that in turn could allow local government to make decisions on the levers it needs to drive economic growth in their communities.
“If we are to continue to punch above our weight economically and increase growth that is accessible to all of our citizens, we need that flexibility and the recognition that as a local government we are best placed to deliver services at a local level.”
Cllr Douglas Lumsden, Co-Leader of Aberdeen City Council, said: “Today marks a very important milestone. First and foremost, the report provides assurance for bond holders, other inward investors and the Council about the economic performance of Aberdeen and the region during what has been a challenging time. It also supports our credit rating review and the work to promote Aberdeen to global institutional investors by Invest Aberdeen and, just as importantly, will inform the Council’s longer-term financial planning.
“Growth that is accessible to everyone in our city is a key priority of this Council – ensuring we help improve the lives of residents and at a wider regional level.
“We have a phenomenally strong base from which to grow our economy across all key economic indicators. Aberdeen’s international reach, in terms of trade and investment, is an obvious area of competitive advantage and our Regional Economic Strategy recognises this.
“The opportunity to diversify within oil and gas and across the energy sector is one we are grasping. We are also ambitious to grow our employment in city centre sectors such as entertainment, tourism, leisure and hospitality.
“There are a number of factors required to unlock growth. The delivery of physical infrastructure is important - but complementing that is the delivery of social infrastructure to meet the needs of our communities as well as an improved image, sense of place and identity. Creating attractive cities and places is an economic cornerstone.
“The key message from today’s conference is that our past and present achievements are not a guarantee of our future success. We must continue to work collaboratively to ensure a bright, prosperous future.”
The full report and summary document are available for download: www.aberdeencity.gov.uk/EPR2018 .