‘Do not forget about the north-east’

Coronavirus continues to wreak its misery across the globe. Some governments, as they pass the peak – at least for the moment – of the immediate health crisis, are beginning to plan to restart their economies.

Attention has turned to how, in what order and at what pace, measures restricting our activities should be lifted.

Over the next few days, the UK Government is likely to set out its guidance for how some workplaces can – when the time is right – start back up again. Whilst there will no doubt be legitimate concerns about timings and implementation to be worked through, the focus upon workplaces, rather than hand-picking sectors or geographies, is entirely sensible.

It also speaks to businesses as adults, reflecting that they too will be as anxious and uncertain as everyone else.

The Scottish Government will no doubt publish their own advice soon too. Whilst it may be wise to tweak the UK approach at the margin, the last thing business needs is a radically different approach north of the border. This will only cause confusion and exasperation in equal measure.

In Scotland our economic plan needs to deal with not one, but two, economic crises.

It has long been understood that Scotland has more than one economy – shaped by their own individual forces. The economy of the North East is the most obvious – frequently buffeted by a global oil market that leaves much of the central belt well alone.

What is interesting is that the crisis in the oil and gas industry has largely gone unnoticed outside of Aberdeen. But oil prices are at their lowest level in 14 years, with the global shutdown leading to a collapse in demand.

The sector in Scotland is not just made of big multinational companies, but many small and medium sized companies operating across engineering and high value services. Many will run out of cash in just a few weeks.

Last week Oil & Gas UK warned that 30,000 jobs in the sector were at risk.

These are not typical or easily replaced jobs. They are disproportionately highly skilled and well-paid. They are also key to delivering our energy transition.

We need these jobs and we need these businesses. And not just for economic prosperity, but also to help fund public services in the future.

Of course, we have been here before. And the North East is no stranger to being buffeted by global markets. But it has now experienced two major blows in a little over 5 years.

This crisis couldn’t have come at a more challenging time. Through 2019 there was a real sense that the region was getting back on its feet. Yes, the economic environment was different, but it had diversified, supported by a City-Region deal, and was looking to the future with renewed optimism across the energy sector and the broader economy.

All this is now at risk.

 

Keeping workers attached to firms through this crisis is an important step in helping the economy emerge from this shutdown. The UK Government’s Coronavirus Job Retention Scheme has been a key mechanism to support this.

But as we look forward, a key element of any economic recovery strategy for Scotland has to be making sure that the world-leading companies and highly skilled workers in the North East are supported to stay there.

When the plan to restart the Scottish economy and help it recover from the pandemic emerges, let us hope that both governments have a plan that speaks to economic challenges in all the economies of Scotland.

Authors

Head of Research at the Fraser of Allander Institute

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