Amid all the gloom about the UK economy, there are some encouraging signs, but Edinburgh needs to address long-term problems facing Princes Street, writes John McLellan.
Doomsters and gloomsters! The UK economy might have shrunk, but once again it has shown a remarkable ability to keep people in jobs and for them to earn more money.
UK employment is now at its highest since 1971, with 425,000 more people in work than a year ago, and wages have grown by 3.9 per cent, the fastest increase for 11 years and outstripping inflation by 1.9 per cent. The economy might have contracted by 0.2 per cent in the second quarter of the year, but people in work will not have noticed.
Unfortunately the Scottish employment rate fell by 1,000 to just below 2.6m, 75.4 per cent of people aged between 16 and 64 compared to the UK’s 76.1 per cent, and the Scottish Government’s growing tax burden – be it workplace parking, tourism, higher income tax rate, private schools or land transaction – will not help narrow the gap.
And while 350 skilled jobs may be preserved for now, nationalising the Ferguson shipyard will not recreate the liner-building heyday of 1930s Clydeside, but with only CalMac ferries on its books it will turn the Scottish Government into both the client and the supplier with the tax-payer picking up a tab. Prestwick Airport, which employs 300 people, has cost the taxpayer some £40m since it was taken over by the Scottish Government six years ago and is now up for sale.
Manufacturing is now the seventh biggest sector in the Scottish economy by number of businesses and eighth for employees, some way behind the leader, professional and technical services. And although in 2018 manufacturing had the second biggest turnover after utilities at £37bn (no total is available for financial services) this is a steady drop from £45bn in 2010 at the same time as total Scottish business turnover rose from £262bn to £268bn.
Growth since 2010 has been mainly in professional and technical services (£21bn from £16bn), information (£16.6bn from £7.4bn), hospitality (£8bn from £6.6bn) and retail (£31.9bn from £28.4bn) and these are the eggs in Edinburgh’s basket for future growth.
Further high street retail growth is on a knife edge, but Edinburgh should get a kick from the opening of the new St James centre next year, which should also free up the army of construction and fitting crews now swarming over the vast project as it nears completion. They will be needed for projects like the Vastint site at Fountainbridge and the Meadowbank Sports Centre, whose steel skeletons are rising fast, and for the possibility that a new planning regime in the city centre will herald a queue of conversions as shops turn into bars, restaurants and hotels.
If Fountainbridge and Meadowbank have taken years to emerge so too has the city council been slow to respond to the fast-evolving retail landscape but the message has finally got through that city centre rules set years ago are no longer fit for purpose.
A report accepted by the planning committee last week proposes a loosening of guidance to preserve Princes Street for shops when it was obvious for years it was in decline with St James and online shopping set to finish it off. The report acknowledges Princes Street is dead after 6pm and the suggested changes will keep some shops but allow restaurants and bars at street level and unlock the potential of often neglected upper floors.
Longer term, it could further increase demand for hotel and catering staff, which makes the Edinburgh International Conference Centre and Napier University concept of a hospitality and catering school based around a hotel all the more attractive.
The challenge for every stage of the economic supply chain is to react quickly to changing circumstances and, while the new rules will now go out for consultation and will in all probability face some resistance, the change has got to come.