LOW oil prices could boost employment by more than 90,000 over the next five years if prices remain at the 50 US dollars (£33) a barrel level, a report has suggested.
The study by PwC also claimed that continually low oil prices could boost the UK economy, with GDP forecast to rise by about one per cent a year on average between 2015 and 2020.
Despite fears over the impact on the North Sea oil industry, the latest PwC research says the economic benefits could result in higher consumer spending and could see a slight narrowing of the UK's trade deficit.
It stated: "In summary, lower oil prices should be positive for most sectors of the UK economy, households and the government.
"But the scale of these benefits remains highly uncertain depending on how oil prices evolve from here."
PwC considered the impact on the UK economy if oil prices remained at their current low level, recovered partially or returned to more than 100 US dollars (£66) a barrel.
If prices remain at about 50 US dollars a barrel, the analysis suggested employment could increase by 91,000 by 2020.
The number of people in work could rise by 37,000 over the period if prices recovered to 73 US dollars (£48) a barrel by 2020 while a return to 108 US dollars (£71) a barrel would only result in a small increase in employment of 3,000.
The report said: "The significant fall in oil prices since mid-2014 should increase overall UK economic activity as the cost of production decreases for businesses, especially for those that are heavily dependent on oil inputs. This will boost both investment and employment.
"Although the oil and gas extraction sector is negatively affected by the reduction in the oil price, sectors such as agriculture, air transport, coke and refined petroleum manufacturing and oil-intensive manufacturing sectors will benefit as the price of their key input falls."
It said the fall in the oil price should also have a small impact in narrowing the UK trade deficit.
Consumers would also benefit, with lower oil prices leading to lower production costs, with the report suggesting a "persistently low" oil price of 50 US dollars a barrel could see household spending rise by £372 a year in real terms between 2015 and 2020.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article