$452 billion shot in UK economy’s arm on the table with oil & gas and other homegrown energy

With forecasts indicating that the United Kingdom (UK) will need billions of oil and gas barrels by 2050 amidst the ongoing economic challenges and energy market headwinds and tailwinds, Britain’s trade body for the offshore energy industry, Offshore Energies UK (OEUK), has outlined in its new report the roadmap that will enable Britain not only to meet the power demand with energy produced at home but also inject hundreds of billions into its economy by allowing oil and gas to thrive alongside low-carbon and clean alternatives in its energy toolbox.

Offshore Energies UK’s ‘2025 Business Outlook’ report spotlights the path the UK is being urged to take to unlock energy reserves, which could curtail its dependence on imports and boost economic growth. OEUK claims that the UK could produce at home half of the 13-15 billion barrels of oil and gas the nation is projected to need by 2050 under the right business conditions.

According to Britain’s trade body, such a move would add up to £150 billion (more than $193.8 billion) of gross value to the UK economy on top of the £200 billion (over $258 billion) from planned production, resulting in around £350 billion (above $452 billion) in total to safeguard energy security, jobs and lower carbon emissions alongside an acceleration of renewables.

OEUK’s report comes after the independent Climate Change Committee estimates, which indicate the UK will require 13-15 billion barrels of oil and gas by 2050, the target date for the economy to achieve net zero. While Britain is on track to produce 4 billion of these barrels, the report finds that another 3 billion barrels could be produced at home to meet half of the UK’s needs with the right polices to encourage firms to invest, rather than increasing its reliance on imports.

Furthermore, the report’s findings indicate that by 2050, when UK electricity demand has more than doubled, oil and gas will still form a fifth of UK energy needs. As a result, the cost of energy is seen as critical to wider industrial strategy and economic success. With this in mind, OEUK concludes that maintaining homegrown gas supplies is key for the UK’s industrial base.

This business outlook coincides with government consultations with the industry on the future of the North Sea and the oil and gas fiscal regime. In the coming months, the trade body notes that interlinked decisions are also expected on the UK government’s Comprehensive Spending Review and new Industrial Strategy, as well as updated environmental guidelines for oil and gas projects.

Stuart Payne, North Sea Transition Authority (NSTA) Chief Executive, said: “The North Sea’s immense energy and decarbonisation resources give the UK an opportunity to chart its own course through the transition, driving investment and job creation along the way. Transformation on this scale is never straightforward, but through dialogue, collaboration and effective planning, we can arrive at the future we want and even accelerate the process.”

Moreover, OEUK sees continued engagement with the industry as critical to creating the globally competitive business environment needed to anchor high-value jobs and investment in the UK. The spending review is perceived to be crucial for key projects, including those in the Track-2 of carbon capture and storage (CCS), which can help future-proof Britain’s heavy industry by stripping out and locking away its carbon emissions.

Offshore Energies UK’s report shows that by making the most of homegrown oil and gas while accelerating renewables and low-carbon solutions, the nation can manage its reliance on imports, as such a “pragmatic approach will enable the UK to retain its world class energy supply chain,” in the wake of a survey showing nine out of ten such companies are looking for investment opportunities outside the UK in countries with more favorable business environments.

David Whitehouse, OEUK’s Chief Executive, emphasized: “The future of the North Sea is in our hands. Our report shows as we work together to accelerate renewables the UK must make the most of its own oil and gas – or choose to increase reliance on imports. We’re fully engaged with asking policy makers to choose a pragmatic path to the low carbon, high-growth and secure economy we all want to see.

“Energy security is national security. In an increasingly volatile world the widening gap between the energy we produce and what we import matters. Secure homegrown oil and gas alongside renewables pays taxes, supports jobs and safeguards the supply chains we need to build our energy future.”

With the geopolitical outlook still cloaked in uncertainty, OEUK’s report details how Britain’s total energy production hit a record low last year and imported over 40% of its total energy needs from abroad.

“Energy security is national security. In an increasingly volatile world the widening gap between the energy we produce and what we import matters. Accelerating offshore wind, carbon capture and hydrogen alongside homegrown oil and gas pays taxes, supports jobs and safeguards the supply chains we need to build our energy future,” added Whitehouse.

Based on the plans disclosed in Britain’s Spring Statement, presented by Rachel Reeves, UK Chancellor, the government is focused on securing the nation’s future through its ‘Plan for Change’ to drive economic growth, as Europe is now facing a generational challenge to its collective security, with global economic uncertainty showing a sharp increase, growth having slowed in many of the UK’s major trading partners, and borrowing costs on the rise across most advanced economies.

The United Kingdom’s government underlined: “Despite a changing world, and supported by the measures that this government has taken, the economy is now forecast to grow faster than expected at the Budget last autumn, in 2026 and every year thereafter. And decisive action since the Budget last autumn means that the fiscal rules continue to be met two years early.

“The government has restored in full headroom to the stability rule. The investment rule is also met with a £15.1 billion buffer in the target year. The government is now taking action to go further and faster to strengthen the UK’s security, to reform the state and to grow the economy. It is making the right choices to bring security to working people and to put more money in their pockets.”

The UK claims to be supporting growth by investing £13 billion more in capital infrastructure over the next five years, launching a construction skills package to train up to 60,000 more skilled workers, and investing an additional £2 billion in social and affordable housing. Britain’s government believes this will raise the level of real GDP by 0.2% by 2029-30, adding £6.8 billion to the economy, and by over 0.4% in 2034-35.

The government says it is going further and faster to drive growth through ambitious supply-side reforms, including increased capital spending, regulatory reform, and the Planning and Infrastructure Bill. Compared to plans set out in Spring Budget 2024, departmental spending will now be almost £70 billion higher in 2028-29.

Barret Kupelian, Chief Economist at PwC UK, said: “Rachel Reeves course-corrected the Autumn Budget—and in doing so, road-tested the new fiscal rules for the first time. As expected, the fiscal headroom shrank by £14 billion because of slower than expected growth, but was restored with a careful mix of tax tweaks, spending cuts and reallocation. The clever bit? Rebalancing the day-to-day aid spending to capital-rich defence spending—capital gets a more favourable treatment under the new fiscal rules, and the government played that card well.”

Aberdeen & Grampian Chamber of Commerce recently reported that Reeves announced Shell’s Jackdaw and Equinor’s Rosebank, two oil and gas projects that have run into delays due to legal challenges on climate change related grounds, will be green-lighted, as the North Sea oil and gas industry is expected to remain an important factor in the British economy “for decades to come.”

Based on the insights provided by the UK’s government, global developments have affected the economy via three main channels, which encapsulate volatile global oil prices that have fed into higher fuel prices, while higher market prices for gas and electricity will contribute to higher consumer prices, adding to the OBR’s Consumer Prices Index (CPI) inflation forecast increasing, with a peak of 3.8% in July 2025.

Additionally, it notes that government bond yields have increased across most advanced economies while global financial market volatility has risen. This is interpreted to reflect higher uncertainty, creating a more challenging environment for businesses to invest and hire workers while also lowering business confidence, consumer sentiment, and economic activity.

Kupelian highlighted: “The fiscal rules now offer a degree of protection to public investment plans, meaning the government can stick to its capital investment programme devised last Autumn, giving businesses the policy certainty about the future. That’s good for confidence—and over time, good for private investment too. The Statement joins a wider international pivot amongst advanced economies toward more home-grown or domestic sources of growth.

“Rachel Reeves’ interpretation of this is more defence spending on domestic suppliers, faster housebuilding with ambitious planning reforms, and a push to bring younger workers into the labour market. In short: investing in people, homes, and hard power. That’s the message coming out of the Spring Statement in a more unpredictable world.”

With growth slowing in many of Britain’s major trading partners, the Organisation for Economic Co-operation and Development (OECD) has downgraded its 2025 forecasts for all G7 economies, including the UK, which is projected to be the second‑fastest growing G7 economy in 2025/2026.

The government is committing to removing the climate change levy (CCL) on the cost of electricity used in electrolysis to produce hydrogen, thus, it is consulting on the best route to do so via legislative changes. The government will also conduct a wider CCL review.

Rachel Taylor, Government and Health Industries Leader at PwC, pointed out: “The Chancellor’s focus on driving stability and long-term growth is a welcomed step forward in improving the business environment – echoing the findings of PwC’s research that showed seven in ten (73%) business leaders believe that should be the primary focus of government.

“The biggest challenges identified by businesses as holding back growth are the supply of skills, digital transformation and developing UK infrastructure. The Chancellor’s statement made significant headway in all three elements in building the UK as a defence super power, focusing on innovation, capital investment across the UK and creating a skilled workforce.”