IT HAS looked like Edinburgh's annus horribilis. The city has reeled under the blows of crisis-struck banks, huge tramworks disruption and rubbish piling on the streets.
But despite all its manifest problems, Edinburgh is fighting back and weathering the recession far better than was feared.
Four progress reports due to be released tomorrow for submission to Edinburgh City Council's economic development committee show that, despite the disruption to the city centre and sharp falls in business for Princes Street retailers, Edinburgh is outperforming comparable cities such as Manchester, Newcastle, London, Birmingham, Bristol and Glasgow on a range of indicators.
These include business formation, employment resilience, inward investment, house prices and city centre footfall.
The reports, seen by The Scotsman, show that Scotland's capital is so far surviving the recession better than had been feared at the height of the financial storm ten months ago.
The tourism and leisure sectors are doing better than last year, while major events, such as the Royal Highland Show, Homecoming and now the start of the Edinburgh Festival, have all helped the capital's restaurants and hotels to fight back and beat the worst of the downturn.
The main report shows that the city has not been as seriously affected as the other cities across four out of five main indicators
: house prices, city centre footfall, airport passenger numbers and new business formation.
The number of new, larger start-up businesses registered for VAT rose by 26 per cent over the April-June quarter. Of particular surprise has been the strength of inward investment. Edinburgh has attracted more overseas investment packages in the first six months of 2009 than in the whole of 2008 and 2007.
And it has helped keep the city's unemployment rate below that for Scotland as a whole and the average for the other cities in the reports. David Anderson, the capital's director of economic development, said: "We all felt last year that the city was facing an armageddon moment. But a lot of the people in the financial sector, who have left their jobs or been made redundant, have been taken on by new companies coming in or expanding, such as Tesco, Virgin and new fund management operations.
"The skills base that we have here has certainly helped," Mr Anderson went on. "It's still early days and unemployment is a lag indicator, but this is not as challenging a situation that we thought it was last year."
Councillor Tom Buchanan, Edinburgh's economic development convener, said: "There's no doubt that Edinburgh has been adversely affected by the declining economy across many areas. However, we've had a relatively soft recession, compared with the experience of similar-sized UK cities."
Unemployment, building development seizures and concerns over further job shake-outs feature prominently in the four reports.
But the overall picture gives more hope than the litter and tram disruption afflicting the city would suggest. There are a number of ways in which Edinburgh is fighting the economic downturn.
House prices are now steadying after sharp falls in 2008 and the opening months of 2009. Average house prices rose in May, while prices in the other cities were still falling. Edinburgh house prices are down 6.7 per cent year-on-year, while those in comparator cities are down 14 per cent.
House sales are rising, with 490 homes sold in the city in May, the third consecutive monthly increase. Interest in larger homes (500,000 plus) is reviving.
Building warrants issued and planning applications received in Edinburgh are both showing signs of recovery. Planning applications received have surpassed building warrants for the first time. Applications received rose 4.4 per cent in July.
Edinburgh airport continues to buck the trend with growth in passenger numbers – well up on the number travelling last year and continuing to rise.
Events and conferences have brought in big numbers: The Heineken Cup final and Rugby League Magic Weekend generated 127,000 spectators between them. The Royal Highland Show enjoyed a record gate of more than 176,000.
A total of 79 conferences in the first quarter brought in 15,000 delegates with an estimated 19 million spending boost.
Hotel room occupancy has held steady at 83 per cent. Bed occupancy is up 17 per cent. Although the average room rate is down 8.6 per cent, hotel room occupancy last month showed an increase of 3 per cent.
Unemployment in the capital, at 3.1 per cent, is the highest since 2000. But this is lower than the average for Scotland as a whole (4 per cent) and the average for comparable cities (5.6 per cent). Claimant count unemployment is 0.9 per cent lower than the Scottish average and 2.5 per cent below that for the other cities.
Bookings for Edinburgh Festival events are up 21 per cent.
The capital attracted 13 overseas investments in the first six months of 2009, more than came in during the whole of 2008 (12) and 2007 (ten). The number of jobs created by foreign direct investment over the past 12 months is more than 1,000.
The number of new businesses being incorporated has generally been rising faster in Edinburgh than in comparator cities. New business start-ups registered in the April-June quarter totalled 475. That is still 11 per cent down on 2008, but the number of larger firms registering for VAT is up by more than a quarter.
More than 36.5m of new developer investment has also been secured for Edinburgh in the second quarter, despite the continued poor availability of credit.
The good news comes a week after The Scotsman reported on another set of key indicators which suggested the wider UK economy had turned a corner.
THE problems in the financial services industry has made unemployment the hot issue for the Edinburgh economy. Many fear that large numbers of jobs are set to go at both Lloyds-HBOS and the Royal Bank of Scotland.
However, last week RBS chief executive Stephen Hester said he believes Edinburgh and Scotland could be insulated from the worst of the redundancies.
The city's labour market has been affected by the global recession,
but unemployment remains low at 3.1 per cent compared with the Scottish rate of 4 per cent and the UK rate of 4.1 per cent.
WHILE average revenue per room is down 8.6 per cent on a year ago, as hotels adjust rates to attract customers, it is encouraging that visitor numbers to the city are holding up well.
Room occupancy has held firm at 83 per cent while bed occupancy is up by 17. 3 per cent.
Conferences are reckoned to have brought in 19.3 million in the second quarter, up 24 per cent on last year.
Meanwhile, Edinburgh's city centre is struggling to make good the disruption caused by the tramworks but the city centre footfall, argues the council, has not significantly declined.
EDINBURGH airport enjoyed its busiest-ever month in July, with passenger numbers up by nearly 6 per cent to 955,800 – the biggest rise for nearly 18 months.
Operator BAA said the airport's fourth consecutive month of growth was largely because of the expansion of no-frills airline Ryanair, whose routes from Edinburgh have quadrupled in a year to 29.
In stark contrast, Glasgow Airport's numbers were down by almost 13 per cent to 818,400, and Aberdeen airport's passenger numbers dropped by 9 per cent to 288,700.
FOREIGN DIRECT INVESTMENT
EDINBURGH attracted 13 overseas investments in the first six months of 2009, more than the whole of 2008 and 2007. Incoming firms included Singapore-based real estate group Fraser and Neave, Gigle Semiconductors of Spain and Worldspreads from Ireland. The most significant markets for Edinburgh in terms of inward FDI and trade are at present North America, Australia and western Europe. City economic development director David Anderson said: "People see Edinburgh as a city with an excellent skills base. It is in a very strong position to compete for companies looking for a skilled and experienced workforce."
WHILE not an obvious economic indicator, the number of planning applications are a vital pointer to the underlying confidence within the general economy. They signify that both households and businesses are prepared to spend money and have confidence in the short-term health of the economy.
Both the number of building warrants issued and planning applications received in Edinburgh are showing signs of recovery and compare well with other major cities. Although still down on last year, the rate of decline for planning applications received is slowing and July saw an increase.
BOTH Savills and Retties estate agencies report a more confident tone in the housing market. "Our best month this year" is how Retties described July. The Edinburgh Solicitors Property Centre sees growing signs of optimism, on the back of the highest number of house sales since June last year, and the fifth consecutive month of increased sales. The average capital house price for the first three months of the year was 198,895, while April-June saw the figure jump to 207,890. Ron Smith, ESPC chief executive, said: "Prices are typically around 10-15 per cent lower than at the peak and this has attracted a number of buyers back to the market."