As the UK continues to feel the full force of the recession, David McCann discovers many reasons to be cheerful in the Capital
STORM clouds continue to gather over the UK economy and the forecast remains gloomy. The credit crunch and banking bailout created a front of low pressure which peaked as redundancies grew and property values fell.
But through the grey skies of a depressed British economy, a ray of light has beamed on to Edinburgh.
Despite the sombre national headlines, it has celebrated a hat-trick of good news stories in recent weeks that, in terms of financial recovery, may suggest an Indian summer for the Capital’s economic fortunes.
First, it was selected ahead of 31 rivals to host the UK Green Investment Bank, then Leith was chosen to host a major new wind farm factory, creating 800 jobs and investment worth £125 million.
Yesterday, it emerged that Edinburgh businesses contribute more to the economy per head of population than any major city in the UK.
Latest figures show the city achieved a 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 provides – of £34,950, ahead of financial powerhouse London on £34,779.
If two strokes of good fortune smacks of coincidence, three is a trend. So how has the Capital bucked the national picture and what is the prognosis for the future?
Experts unanimously point to the diversity of the city’s economy for its rude health. Although jobs have been shed at Lloyds and the Royal Bank of Scotland, redundancies hit a skilled and educated workforce who have often found jobs relatively quickly at smaller local firms.
Tourism, as ever, is key to Edinburgh’s vitality, while the city’s sizeable public sector industry may have cushioned job losses felt elsewhere.
Ron McQuaid, director of the Employment Research Institute at Edinburgh Napier University, said the Capital has been sustained by advanced technology and service companies, as well as health and higher education centres.
He said, however, that the GVA results can be “relatively imprecise” as the data comes from 2009, before the financial crisis “fully hit”.
He added: “The fact many people commute into Edinburgh each day from places such as Fife means that their value added may be allocated to Edinburgh residents, although all the cities in the study will also have commuting coming in, so Edinburgh’s are not necessarily over-inflated.”
Dave Anderson, director of city development at the City Chambers, said the credit crunch spurred a tourism boom in the city from spring 2009 when fluctuations in the exchange rate helped boost overseas visitors numbers.
He suggested the downturn may have actually drawn more employers to the city, attracted by an increasingly fluid labour market.
“At one point in 2007 we had virtually full employment so employers would be reluctant to come here because they knew they would struggle to get labour and there would be competition and potential wage inflation as a result of that.
“Now the fundamentals remain good but there is more available labour supply and the city’s population has been growing – by August, we will have 500,000 for the first time.”
He concluded that more Grade A office space would further encourage investors, but it is in the emerging sectors of renewable energy, creative industries and digital media where the Capital is breaking new ground.
Graham Birse, policy director at Edinburgh Chamber of Commerce, said it was “strength in depth” that fostered a robust economy.
“We don’t have all our eggs in a financial services basket or any particular sector,” he said.
“It’s important that we recognise what we are trying to do is build a future for Edinburgh as prosperous as its past. For that to happen, we need to ensure it’s not just a museum piece but a thriving, modern capital city.”