Just Capital as Edinburgh economy is strongest of any city in the UK

Published on Monday 30 June 2008 10:40

EDINBURGH has the strongest economy of any UK city, new figures revealed today.

The city knocked London into second place, according to the national accounting group UHY Hacker Young, which ranks cities according to their contribution to the national economy.

Edinburgh hit the top spot with a GVA (Gross Value Added) of 28,432 per resident, a measure used to estimate the value of goods and services produced. London was second with, with 27,672, while the UK average was 18,145.

But there was little reason to celebrate for the city's banks and law firms, which are expected to cut jobs as the credit crunch worsens. Large numbers of Scottish lawyers and financial services workers are expected to be made redundant following a drop in profits.

The Confederation of British Industry has warned that the worsening outlook for jobs among banks, insurers, and other finance companies is part of a long-term trend.

Legal firms also face the threat of large-scale job cuts and dramatically reduced profits, according to a survey by the accounting giant PKF. They found law firms who work in the property market were likely to be worse affected. Edinburgh has not been as badly hit by the slump in the housing market as other cities, but is still likely to be affected.

UHY Hacker Young found Edinburgh was the strongest economy, primarily thanks to its well established and fast growing banking and insurance sectors. They compared the UK's 30 largest cities by their Gross Value Added and their growth over the past ten years.They found Belfast, in third place, was the fastest growing economy in the UK.

They said Edinburgh's status as capital of Scotland has also worked in its favour in boosting its public sector, notably in the legal profession. The city has also benefited from a number of companies duplicating their headquarter functions from London to Edinburgh in order to get closer to their Scottish clientele.

Howard Spencer, chairman of UHY Hacker Young, said: "This has helped Edinburgh consolidate its position as the second largest financial centre in the UK after London."

"As Europe's leading financial centre, London should have fared better than Edinburgh but its incredibly high property prices are putting a serious dent in business earnings."

"While still generating substantially more revenue than Edinburgh, London is also home to five of the UK's ten most deprived local authorities , which has raised the region's unemployment rate to 7.9 per cent , the highest in the UK. Its overstretched and unreliable transport infrastructure is posing constraints on its economic growth as well."

Although the next few months look tough for the financial and legal sectors, there was some good news today as Forth Ports announced a major investment in renewable energy.

The company, which runs the ports at Leith and Rosyth, announced a joint project with Scottish and Southern Energy plc. They will be developing energy projects at their sites in Scotland, which could include on-shore and off-shore wind turbines. This is set to create up to 200 skilled jobs.

Energy minister Jim Mather said: "This collaborative project will aid the regeneration of Forth Ports' property asset base, while creating skilled jobs and cutting emissions, which is exactly in line with our strategy to put renewables at the heart of economic growth in Scotland."