Aberdeen's post‑oil downturn deepens as fields close, shops and jobs fall away

Aberdeen’s economy has shown widening signs of strain as the North Sea oil and gas sector contracts, contributing to rising unemployment, a fall in property values to levels last seen before the 2008 financial crisis and the closure of major retailers and hospitality venues.

Local officials, business groups and politicians point to a combination of a long-running oil price slump that began in 2014 and recent policy changes as drivers of the downturn. The Office for National Statistics put the city’s average house price at about £142,000 in June, roughly comparable with 2007 levels, compared with a 2014 peak of about £212,000.

Around 180 of the UK’s roughly 280 current oil and gas fields are expected to close over the next five years, and political figures have warned of large-scale job losses as the sector changes. Conservative Party leader Kemi Badenoch, speaking in Aberdeen this week, said as many as 200,000 jobs across the sector were "in danger" and called for renewed drilling to unlock remaining North Sea reserves she described as a "cornerstone of Britain’s future." Those figures and proposals have been presented by opponents of current government policy; the government and industry bodies say forecasts vary by scenario.

Labour’s decision in recent months to stop issuing new fossil fuel production licences — a policy announced by Energy Secretary Ed Miliband last year — has been criticised by Conservative and business figures who say it is accelerating the sector’s decline. Supporters of the move say it is part of a legal and policy shift toward meeting the UK’s net zero commitments and stimulating investment in low‑carbon industries.

The human and commercial impacts of the sector’s long contraction are visible across the city. Several national retailers that expanded during earlier boom years have closed in recent years: John Lewis ended its presence in 2021, Debenhams closed in 2020 and Marks & Spencer closed its St Nicholas Street store after 81 years this year. BrewDog said in July it had closed its flagship Aberdeen pub because it was no longer "economically viable." Vacant and boarded units now share Union Street with vaping outlets and charity shops, and foodbanks have become more prominent.

Retired oil and gas workers and long‑time residents interviewed in Aberdeen described a marked change from the city’s boom decades. A 70‑year‑old retired pump engineer said he had worked offshore for more than 40 years and described the industry as greatly diminished. Clifford Holland, 75, a former Shell worker, pointed to the demolition of the company’s once‑prominent headquarters as symbolic of the change. Other residents recalled bustling city centre trade during the 1980s oil boom and said current conditions were markedly quieter.

Unemployment in Aberdeen stood at about 4.3 percent, above the Scottish average, and more than one in five working‑age residents — reported at 21.6 percent, or roughly 39,500 people — were classed as economically inactive, according to figures cited by local reports. Local charities and community groups say demand at emergency food collection points has risen, and some council services have been scaled back; the city council closed the Beach Leisure Centre in 2023, citing increased energy costs.

Industry numbers and independent analysts point to a mix of structural and cyclical factors behind the downturn. The international oil price slump from 2014 squeezed investment and work in the North Sea and prompted restructuring and cost cuts. Technological changes, decommissioning activity and reduced staffing on new projects have also reshaped employment patterns. Companies operating in the UK sector have in recent years focused more on decommissioning ageing infrastructure and making existing fields more efficient.

Political debate has intensified over whether lifting restrictions on new licences would reverse the city’s decline. In Aberdeen, Conservative politicians and some local business leaders have urged a return to increased exploration and production, arguing that additional development could preserve jobs, generate tax revenues and stabilise the local economy. Scottish Conservative leader Russell Findlay and other MPs for the north‑east have framed the issue as one of protecting livelihoods.

Labour and environmental advocates counter that the global energy transition requires shifting investment into low‑carbon sectors and that long‑term economic resilience depends on diversification. The UK government has said it will balance energy security, economic considerations and net zero commitments when setting energy policy.

The region’s decline has also coincided with discoveries elsewhere in the North Sea. Norwegian authorities this year reported a significant find in waters geologically similar to parts of the UK sector, a development some local politicians and industry commentators have cited as evidence of remaining hydrocarbon potential in the wider basin.

Economists say the trajectory for Aberdeen will depend on a range of factors, including global oil and gas prices, private sector investment decisions, the outcome of political debates over licensing and the pace of growth in renewables and other local industries. For many residents and former energy workers, the question is whether public policy and private investment can combine to create new employment opportunities that offset losses from the contracting oil and gas sector.

As the city seeks a path forward, local groups and elected officials are pursuing a mix of responses: securing transitional funding, pursuing energy transition projects and urging national policymakers to consider the economic consequences of licence and production decisions. The contest between calls for renewed fossil fuel development and plans for a low‑carbon future is likely to remain a central issue for Aberdeen’s economy and the wider North Sea region in the near term.