Edinburgh's business focus proves a world beater for economic growth
EDINBURGH has the second- fastest growing economy of 20 of the world's top cities - ahead of London, Paris and Boston - a study has revealed.
The study, by consultants BAK Basel Economics on behalf of Scottish Enterprise, describes the capital and its hinterland as a "business-focused metropolis" with a highly-competitive banking sector.
But the research highlights a raft of weakness which the experts behind the study say must be addressed - including transport connections, tourism and the hi-tech sector.
"The growth in the region's financial services and tourism sectors show it has strengths as a business and leisure city, while the academic research excellence of its university base and emerging life sciences sector also provides a sound basis for high tech industries," said Dr Christoph Koellreuter, director of BAK Basel Economics.
But he added: "A strong innovation push is required - the basic resources are available, but they have yet to be put to the most productive use."
The study, which compared the wider Edinburgh area - including the Lothians, Fife, Forth Valley and the Borders - against 19 successful city regions in Europe and the United States, ranked the Scottish capital 15th in terms of income per capita. However, an upsurge in economic performance over the past five years shows the city is catching up, ranking behind only Manchester in terms of growth.
The study, unveiled at a conference yesterday, found the Edinburgh region's productivity is more than 20 per cent lower than average, despite annual employment growth of 1.4 per cent.
Dr Koellreuter praised Edinburgh's financial sector, with the Royal Bank of Scotland ranking fifth in the world's top banks, but said a high concentration of public services in the city is unlikely to lead to a growth in production.
"Overall productivity levels should be the primary focus of economic policy," he said. "Productivity levels have a huge influence on the competitiveness of a region and the wellbeing of its inhabitants. To bring productivity up to the level of its international competitors is Edinburgh's number one challenge."
The Swiss consultants said Edinburgh's geographical position in relation to Europe and the world was a "disadvantage", but they emphasised the need for better transport connections.
While praising Edinburgh for its cultural, catering and sports facilities, the report said the region as a whole had to do more to attract visitors.
The report, which looks ahead to the next 25 years, highlights the need to concentrate on research and development while supporting close networks between companies and research institutions.
"Edinburgh has world-leading niches like stem cell research which look set to become much more important over time," said Dr Koellreuter. "[However] some caution is necessary as the size of the hi-tech sector is comparatively small in Edinburgh.
"It is therefore unlikely to be a major driver of metro Edinburgh's for quite some time to come.
"In addition, the hi-tech sector as a whole has been vulnerable to structural shifts over the period covered by this report - with electronics taking a major hit in the late 1990s."
Professor Tim O'Shea, principal of Edinburgh University, said the institution's research departments were working closely with multi-national companies to spearhead research in science and technology.
Dr Koellreuter said stronger links had to be forged between Edinburgh and Glasgow to make an impact on the country's economy and tourism.
Jim McFarlane, senior director of operations for Scottish Enterprise, said:
"Investing in our capital's infrastructure and public spaces and enhancing its reputation as one of Europe's top capital cities will not only attract more visitors, but will also attract new businesses and talented people that will enable our business sectors to continue to thrive."
The leader of Edinburgh City Council, Donald Anderson, said the city has become one of the best in Britain, but admitted more had to be done to improve transport and build more affordable houses.
He said: "In the past ten years the quality of life in Edinburgh has improved to the point where I believe that this is now the best city in Britain. However, we must not be complacent. We still face challenges in the areas of affordable housing, transport and key workers.
"That is why we are working with our partners in the business community to face those challenges, maximise our potential and achieve our ambition of being the most successful and sustainable city region in northern Europe by 2020."
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Thursday 23 May 2013
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