Aberdeen bucks trend in recession

Only city to grow during economic downturn

ABERDEEN was the only major UK city to grow its economy during the recession, according to a new study.

Calculations of Gross Value Added (GVA) – the measure of a region’s contribution to the UK economy according to the value of the goods and services it produces – shows that the northeast city was the only area where GVA per resident grew in the year to January 1, 2010.

In Aberdeen there was a rise of 1.1% from £28,442 to £28,731. Analysts believe the city was “largely unaffected” by the financial crisis due to the oil and gas industry. In comparison, Gvafell in both Edinburgh and Glasgow, which were hit by the downturn in the financial services sector.

The analysis has been carried out by accountancy firm UHY Hacker Young. Partner Marc Waterman, said: “The situation in Aberdeen is unique within the UK. It’s the only major city in the UK that has an economy based almost entirely around the oil and gas industry.

“Not only is it benefiting from a revival in North Sea exploration but Aberdeen is now a global leader in oil services companies.

“Many Aberdeen headquartered oil and gas exploration companies and oil services companies operate on a global basis. Aberdeen has become a global centre of excellence for oil services companies so it directly benefits from the exploration boom in emerging markets.”

Tom Faichnie, Corporate Finance partner at Campbell Dallas, a member of UHY International, said: “While drilling in the North Sea was significantly curtailed in the period, the impact of this on the Aberdeen economy was less severe than other areas of the UK.

“Unemployment has remained relatively low and the local oilfield service sector which has been developed in the region continued to be in demand to support andmaintain the producing assets in the North Sea.”

In the study Edinburgh remains the biggest per capita contributor to the UK economy with a GVA of £34,950 for 2009 down from £34,950 in 2008. In Glasgow, GVA fell from £29,897 to £29,472 while in Dundee the drop was from larger at 2.2% – from £17,393 to £17,011.

The GVA per head in London fell from £34,964 to £34,779.

Mr Waterman said: “For years London easily outpaced other UK towns and cities in its economic contribution. But the credit crunch hit this sector hard and has damaged London’s ability to generate wealth.

“Although Edinburgh also boasts a large financial services sector, it was never as dominant as London’s and so the downturn did not have the same devastating result. Thousands of highpaying banking jobs, along with advisers, such as lawyers, have been shed in London.”

Unemployment is a crucial factor in the study which points out that government figures for 2010 show unemployment in London stood at 9.1% while in Edinburgh it was 6.3%.

Mr Wa t e r man added: “London’s comparatively high unemployment rate will have had a sharp impact on its wealthcreating potential.”

According to UHY Hacker Young, GVA for the British economy as a whole contracted by 2.7% in the year to January 1, 2010 while the average Briton generates £20,341 per year.