Bill Jamieson: Trams snarl-up brings out a touch of economic resilience

YESTERDAY, I ended up at the wrong conference. I had been due to attend a British American Project confab out at the Gyle, Edinburgh.

I got as far as the Grassmarket before a horrific traffic snarl-up forced me to turn back. I blamed it on the tramworks.

This freed me up to attend another conference, on the future of Edinburgh organised by the Centre for Scottish Public Policy. A strong presentation by Richard Jeffrey, new head of the tram project, just about swung me round to the view that the blasted trams might, in the end, be a good thing.

But the faultless presentation by Clare Reid, strategic development director at Experian, revealed another reason why I was sitting in the "wrong" conference: Edinburgh is surviving this recession rather better than most other city regions – and better than its citizens would care to admit.

The figures at UK level confirm the longest recession since modern records began, with four quarters of falling output. Third-quarter figures for Scotland are likely to echo those for the UK as a whole. Some 20,000 jobs have been lost in the wider capital city region.

City centre footfall is down 14 per cent. But despite this, Edinburgh stands to do better than most UK city regions with a recovery to growth of just over 1 per cent next year – less than Bristol but higher than Glasgow.

Is the end in sight? Not quite. Some 18,000 jobs, she warns, are still to go and it will be 2011 before we see a return to net employment growth. The prediction at Experian is for "a slow, protracted, fragile recovery".

But the reason for hope is that Edinburgh city region has the good mix of growth sectors that should put it ahead of most other cities – and she does not believe that the financial sector has gone ex-growth.

Tough though it has been for the city in the past 12 months, the word that keeps popping up is resilience. Economists refer to resilience as the capacity of an economy to withstand economic shocks. The less distressed an economy is by an external shock, or the faster it bounces back and returns to the point prior to the shock, the more resilient it is.

Edinburgh certainly enjoyed a good summer and Festival season, with airport passenger numbers running at best-ever levels and hotel room occupancy up four percentage points in the summer.

House prices are also showing resilience – as are house sales. Retties, one of the capital's biggest estate agencies, says it has just recorded the best weekly sales result ever in its 16-year history. It sold 10 million worth of property in Edinburgh the week commencing 19 October. This comes on top of strong summer sales that saw the firm sell a record-breaking 76m worth of property in July, August and September across Scotland.

But resilience is also about the ability of an economy to show flexibility and adaptiveness, particularly in its business base and workforce. Scotland's capital also benefits from population growth and being a highly attractive city in which to live.

This was a cautiously realistic but upbeat presentation. And, who knows, one day those tramworks could come to an end – an economic boost in itself, even before they start running.