![\"Russell](\"https:\/\/dailybusinessgroup.co.uk\/wp-content\/uploads\/2025\/02\/Russell-Borthwick-at-SAC-26-feb-25.png\")
North east Scotland\u2019s economy is continuing to diverge sharply from the rest of the UK according to new research showing the impact of the windfall tax on the oil and gas sector.<\/p>\n
Business confidence has plunged to its weakest level since the height of the Covid pandemic.<\/p>\n
Just 14% of firms in the region reported increased sales in the final quarter of 2025 \u2013 less than half the national figure \u2013 while nearly half expect orders to fall in the months ahead.<\/p>\n
The deteriorating trading environment, reported by Aberdeen & Grampian Chamber of Commerce, is now feeding directly into workforce decisions. <\/p>\n
The number of firms cutting jobs rose steadily through 2025, with the region recording its lowest level of employment growth since 2020. <\/p>\n
Looking ahead, more than a quarter of North-east businesses expect their workforce to \u2013 in stark contrast with the UK as a whole.<\/p>\n
Confidence in future revenues has also weakened significantly. Fewer than one in four North-east firms expect turnover to grow this year, while almost 40% anticipate a decline \u2013 the worst outlook since the depths of the pandemic.<\/p>\n
Half of businesses are forecasting falling profits, nearly 20 percentage points worse than the national position.<\/p>\n
Taxation remains firmly the number one constraint on North-east businesses- with firms citing the cumulative impact of the Energy Profits Levy- and lingering inflationary pressure as the major barriers to growth. <\/p>\n
Cost pressures remain challenging, particularly around labour and utilities, and cashflow continues to deteriorate faster than elsewhere in the UK.<\/p>\n
The Chamber is again urging the UK Government to urgently reassess its approach to taxation and wider energy policy, arguing that the current framework is undermining confidence, accelerating job losses and weakening the supply chains required to deliver the energy transition.<\/p>\n Russell Borthwick, the Chamber\u2019s chief executive, said: \u201cThis report shows a region under sustained pressure and running out of road. <\/p>\n \u201cConfidence has drained away quarter by quarter, and we are now seeing the real-world consequences of the Energy Profits Levy on jobs, investment and future growth prospects. Not just in oil and gas businesses but across all sectors and business types here.\u00a0<\/p>\n \u201cThe North-east is being hit harder than any other part of the UK, not because of a lack of ambition or capability, but because policy decisions are actively working against the businesses that underpin our economy, not dissimilar to what we saw in mining communities in the 1980s.<\/p>\n \u201cWhen fewer than a quarter of firms expect revenues to grow and a third say survival is their main priority, something is fundamentally wrong.<\/p>\n \u201cThe government must recognise the damage being done and act quickly to replace the Energy Profits Levy (EPL) with the agreed successor regime in 2026, not 2030.\u201d<\/p>\n \t <\/div>\n![\"Ben](\"https:\/\/dailybusinessgroup.co.uk\/wp-content\/uploads\/2025\/12\/Ben-Martin-and-Russell-Borthwick-at-Treasury.png\")