I AM sure I do not need to remind anyone of the ongoing problems in the oil and gas industry caused by the collapse in world oil prices.
Mackay Consultants’ latest monthly report lists announcements of up to 900 job losses in the region.
However, the report also highlights many proposed new investments, notably in the hotel and housing sectors, in addition to the plans to invest £333million in a new exhibition and conference centre (AECC) in Aberdeen.
I find it very difficult to reconcile some of these plans with a realistic economic outlook for the next few years.
A few people have accused me of being too pessimistic but it is possible to produce much gloomier forecasts than mine, particularly if you believe that oil prices will remain below $80 per barrel for the next five years.
There are currently plans for at least six new hotels in Aberdeen, with 1,200 bedrooms, plus one on the Ury estate near Stonehaven and the expansion of the Meldrum Country House Hotel.
There has been a big shortage of beds in the city for years and the midweek prices have often been extortionate.
I have been surprised at the low level of investment in the hotel industry in recent years.
Many of the current plans have been in the pipeline for some time, so decisions will have been taken before the oil price collapse.
I suspect that some of the current proposals will not proceed when the developers update their financial projections.
There are similar plans for a huge increase in housebuilding in the AGCC region, with the latest plans totalling over 2,500 new homes.
I take a different view on these because there has been a massive fall in building in recent years, despite the population increase and local economic boom.
The number built in 2014 was less than half the annual average in the mid-2000s.
The housing shortfall has caused serious social and economic problems.
An obvious impact of the shortfall has been a substantial rise in house prices in the region. That will have benefited existing owners but not other people and the economy as a whole.
I expect there to be a substantial rise in housebuilding over the next few years, despite the oil industry’s problems.
A huge backlog of demand has built up which will not disappear quickly.
However, builders will need to see significant falls in land and building costs to satisfy the demand.
Overall, there needs to be a reconciliation between the understandably ambitious plans of 2014 and the current realities of the North-east economy.
I expect economic growth over the next few years to average just under 2% a year, which would be close to the long term historical average but well below that in recent years.
The bottom line is that some of the proposed projects mentioned above will not go ahead.