Edinburgh gives more to UK than any other city
EDINBURGH businesses contribute more to the economy per head of population than any other major city in the UK, according to a new study.
Analysts made their calculations using 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.
Latest figures show the city had a GVA of £34,950 for 2009, down 0.52 per cent on the previous year. This figure puts it ahead of London, where the GVA fell from £34,964 to £34,779, a decrease of 0.53 per cent.
The report also claimed Scottish cities as whole performed well in the GVA league table, with places in the top five towns and cities going to Edinburgh, Glasgow and Aberdeen.
The report also discovered that oil-rich Aberdeen was the only major UK city to grow its economy during the recession as its GVA per resident grew in 2010. The accountancy firm UHY Hacker Young, which carried out the study, said that in Aberdeen there was a rise of 1.1 per cent in GVA from £28,442 to £28,731 in the year to 1 January, 2010.
Experts believe the city was “largely unaffected” by the financial crisis because of the oil and gas industry.
Marc Waterman, partner at the accountancy firm said that London had been damaged by the credit-crunch.
“For years, London easily outpaced other UK towns and cities in its economic contribution, driven by its huge wholesale financial services industry.
“But the credit crunch hit this sector hard and has damaged London’s ability to generate wealth for the economy,” he said.
He added: “Although Edinburgh also boasts a large financial services sector, it was never as dominant as London’s and so the downturn did not have the same devastating result.
“Thousands of high-paying banking jobs, along with advisers, such as lawyers, have been shed in London. The capital also has significant areas of poverty and high unemployment.”
Unemployment is a crucial factor according to the study, which points out that government figures for 2010 show unemployment in London stood at 9.1 per cent, while in Edinburgh it was 6.3 per cent.
Unemployment in the UK as a whole was 7.7 per cent.
Mr Waterman added: “It might sound obvious, but people who are out of work do not contribute to the economic wealth of the country.
“London’s comparatively high unemployment rate will have had a sharp impact on its wealth-creating potential.”
According to UHY Hacker Young, GVA for the British economy as a whole contracted by 2.7 per cent in the year to 1 January, 2010, and the average Briton generates £20,341 per year.
Mr Waterman said: “The situation in Aberdeen is unique within the UK. It’s the only major city in the UK that has an economy based almost entirely around the oil and gas industry.
“Not only is it benefiting from a revival in North Sea exploration, but Aberdeen is now a global leader in oil services companies.
“Many Aberdeen-headquartered oil and gas exploration companies and oil services companies operate on a global basis.
“Aberdeen has become a global centre of excellence for oil services companies, so it directly benefits from the exploration boom in emerging markets.”
Tom Faichnie, corporate finance partner at Campbell Dallas, the only Scottish member of UHY International, added: “While drilling in the North Sea was significantly curtailed in the period, the impact of this on the Aberdeen economy was less severe than other areas of the UK.
“Unemployment has remained relatively low and the local oilfield service sector which has been developed in the region continued to be in demand to support and maintain the producing assets in the North Sea.”
Mr Faichnie added: “This was helped by the growing international business being done by Aberdeen companies – the latest export survey produced by Aberdeen city and shire councils showed 75 per cent of oil and gas companies surveyed provide their goods and services to international markets.
“Aberdeen-led oil and gas technology continues to be in demand throughout the world, helping Aberdeen businesses buck the trend seen everywhere else in the UK.”
David Bell, professor of economics at Stirling University, said the Aberdeen results were “not surprising”.
He added: “It is good that Aberdeen is becoming an international hub for oil expertise.”
However, Prof Bell said caution should be taken when looking at such results.
“Using GVA to calculate a particular city’s wealth might not be that accurate.
“It would need all the people who worked in the city to live in the city, but people might work in Edinburgh but live, for example, in East Lothian. That needs to be taken into consideration.
“The Edinburgh result is a little surprising, but if true, then it is good news.”
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Thursday 20 June 2013
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