Fewer business are being created in Aberdeen than any other city in the UK, a new report has revealed.
The latest SME health check index, by Clydesdale Bank owner CYBG, found the Granite City had been particularly hit by the oil and gas downturn between 2014 and 2018.
As a result of the economic decline startup numbers only grew by 1% over the four years.
The report also found falling sales and confidence levels among Scottish SMEs in the first quarter of this year mean they now have the weakest business confidence of anywhere in the UK.
But last night business leaders said the region was picking up and that over the past few months North Sea production has grown to its highest level since 2011. Aberdeen and Grampian Chamber of Commerce’s latest Oil and Gas Survey also shows rising investment in the sector, bucking weaker trends nationally.
Gavin Opperman, group customer banking director at CYBG, also said despite the gloomy top line figure and “persistent” low confidence amongst the country’s SMEs, there were grounds for “cautious optimism”.
Callum Gray, corporate finance director at Anderson Anderson & Brown said the findings highlight the growth and improvement in trading conditions we are witnessing have been offset by certain areas, namely, professional services, technical services and scientific companies.
He said: “Speaking with our clients and fellow business advisors, we note that while confidence across the oil and gas sector is improving, these businesses often experience a timing lag so we would anticipate an improvement in their trading performance as the year goes on.
“We are also encouraged by the growth experienced in businesses concerned in information and communications, a trend we anticipate continuing, as business owners recognise that to remain competitive, technology is core to enhancing their product and service offering, as are interactions with stakeholders.”
Business experts say economy is picking up
Gary McEwan, CEO of Elevator, and Russell Borthwick, chief executive, Aberdeen and Grampian Chamber of Commerce said north-east confidence is on the rise paving way for new businesses to enter the marketplace.
In a joint statement they said: “While the findings of the CYBG report create pause for thought, our impression is of a region which continues to create one of the best possible environments to start and grow a business.
“Between April 2014 and November 2018, Elevator supported more than 5,300 business start-ups across the north-east – a 43% increase in start-up business activity.
“Through our unique business delivery model, we’re driving the growth of an entrepreneurial culture and the development of an entrepreneurial society. This is building a new generation of diverse sustainable businesses, with Aberdeen city’s five-year business survival rate outperforming both Glasgow and Edinburgh.
“The decline in the start-up rate recorded in this report is attributed to the downturn in oil and gas. Over the past few months, we’ve seen production in the North Sea hit the highest levels since 2011, a seven-year high, and AGCC’s latest Oil and Gas Survey shows rising investment in the sector, bucking weaker trends nationally.
“Our bold Regional Economic Strategy is transitioning the region towards a more diverse economy, positioning our region as the all-energy hub for the future, and building on our strengths in life sciences, food and drink, tourism and digital. With the chamber investment tracker recording £8.4bn of investment in projects across the region, we’re confident that we have the infrastructure to realise that vision.
“A diverse and vibrant start up scene is a key underlying trend in all successful regions; it is very apparent to us – through our relationships with the region’s business community, that confidence is on the rise.
“Through the collective endeavours of partners in the region, including Elevator and AGCC, we’re confident that the north-east will retain its place as one of the best regions to start and grow a business in the UK.”
