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Aberdeen reliance on oil sector could be ‘danger to whole city’ during recovery, think tank warns

North Sea
North Sea

Aberdeen’s longstanding reliance on the oil and gas sector could become the biggest “danger” to its overall recovery following a second Covid-19 lockdown, according to an economic think tank.

Centre for Cities, a UK urban policy research unit, claims the survival of Aberdeen’s largest industry and the return of its workers to the city centre is essential to prevent a domino effect on other vital trading sectors, like hospitality.

The city’s inability to benefit from UK Government schemes, such as the Eat Out to Help Out discounted meals venture, has also seen Aberdeen miss out on a “crucial period for recovery”.

City council leaders warned this week Aberdeen’s extended lockdown could put more than 5,000 jobs at risk.

Latest figures also put the number of North Sea job losses at around 7,500.

Kathrin Enekel, senior analyst for Centre for Cities, said: “Aberdeen has a very high share of people who are working in industries that are expected to be highly affected, so this could be a double hit on the city.

Kathrin Enenkel, senior analyst at Centre for Cities think tank.

“It’s a sector that would normally fuel the whole economy through higher wages and workers who spend their money in the city.

“If this sector is really affected over the next few months then there will be an additional negative impact for Aberdeen.

“Maybe it has been a benefit in the past, but definitely in this crisis it could be a danger to the whole city.”

Oil and Gas UK’s stakeholder and communications director, Gareth Wynn, agreed that the impact of Covid-19 and low oil and gas prices has “hit the industry hard”.

He added: “Inevitably, this has had a knock on effect in energy communities like Aberdeen.

“More and more companies are extending their activity into other parts of the energy sector alongside their work in oil and gas.

“The industry is already changing to embrace what is needed so although times are tough at the moment, we still have a strong future ahead of us.”

Ms Enekel also warned that the severely reduced footfall in Aberdeen city centre means it is now lagging behind other cities in terms of recovery.

She said it may have to “restart from the beginning” while facing “a slower recovery”, despite a Scottish Government injection of £1 million for hard-hit bars and restaurants.

Ms Enekel added: “Since the reintroduction of lockdown, footfall to the city centre really stopped.

“For some cities the Eat Out to Help Out scheme really meant recovery, but for Aberdeen this crucial period for recovery has been delayed significantly.

“If some bars and restaurants can’t open up or benefit from the schemes available, it will definitely lead to more job losses.”

Scottish Conservative leader Douglas Ross last night poured scorn on the Scottish Government’s £1 million pledge to support struggling businesses and called for an injection of £4.5 million to protect “under threat jobs” in the city.

He said: “More than 5,000 jobs are under threat unless we urgently get Aberdeen businesses the support they need.

“It is vital that Aberdeen is not left behind during this extremely challenging time.

“The current support package is nowhere near enough to protect jobs.”

Co-leader of Aberdeen City Council, Douglas Lumsden, also urged the Scottish Government not to “stand by and only provide minimal support while the local economy collapses”.

A Scottish Government spokeswoman defended the £1 million fund and said Holyrood was calling for an extension to the UK Government Eat Out to Help Out scheme.

She added: “We recognise the impact the necessary restrictions are having in Aberdeen.

“We continue to engage with local partners to ensure we understand all the impacts of the restrictions and we call on the UK Government to consider what support it can provide through its schemes, including a local extension to the Eat Out to Help Out Scheme.

“Such an extension would not cost the Treasury any additional funds but rather make up for the period when Aberdeen businesses have been unable to use the scheme.”

“We don’t want the restrictions to last any longer than necessary but they are required to suppress the virus.

“If the number of infections continue to fall, we hope that restrictions on some Aberdeen premises will begin to be lifted from next week.”

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