Bill Jamieson: Resilient capital defies the gloom

The turmoil in Edinburgh caused by the trams is only surface-deep – the city is in good health

FAIR maid of Edinburgh, city of elegance and grace, where, oh where, art thou? Buried, it seems, under unending tramworks rubble. Look on these works, ye mighty, and despair: seldom has Scotland’s capital, one of the most graceful and pleasing of Europe’s great cities, seemed so beleaguered.

Visitors to Edinburgh today can be forgiven for thinking they have stumbled onto the set of a Hollywood disaster movie, a reconstruction of some pocket civil war as we battle with street upheavals, closures and diversions. There is the constant din of pneumatic drills. Utility repairs, scattered like jagged shell holes after a relentless bombardment, pockmark the city centre.

There is the mushrooming of road sign admonitions. Every crawling route through the rubble is marked by snaking lines of traffic cones leading to yet another set of temporary traffic lights teasingly flashing green for a fraction of the time they are stuck at red. Delay, disruption, anger and despair attend every journey through a city so proud of its decorum and repose. What has happened to the noble capital at peace with itself? Where has it gone?

And what a metaphor all this seems for a deeper misery that has clouded a face so fair: the grey, impenetrable haar of economic downturn. Unemployment is up. Vacancies are down. Shops and businesses are closing. Development sites have long been abandoned to tattered boarding, rusty fencing, dog mess and bindweed. The two pillars of a once-confident financial sector mark the business landscape like bleeding stumps. New Town fund managers trip over the cobbles as their BlackBerries ping with the latest stock market slide. Seldom has the city looked more down at heel, and the prospect of new shoes so remote.

Were this a fair or comprehensive summary of the city’s fortunes, we might as well throw in the towel now. Fortunately, I am glad to report that it is not. The outward and visible mess of the tramworks has masked a more enduring and positive reality: Edinburgh has fared better through this downturn than comparable UK cities and has every prospect of growth and expansion in the years ahead. There is great potential in sectors such as life sciences, renewable energy, arts and creative industries, education and, yes, even financial services.

What a modest and deceptive story Edinburgh presents to the world. It trades, with great success, on its attraction as a city steeped in culture, history and Hanseatic architecture, its spires and closes untouched by time. But beneath this noble exterior, seemingly indifferent to the world of economic activity, much has stirred. This genteel lady of mature years, borne into the 21st century like a dowager duchess in a sedan chair, has been growing like the clappers.

Over the last decade, the population of Edinburgh and its wider city region has grown at a faster rate than that of Scotland and the UK. A similar trend is projected for the next ten years. Between 1998 and 2008, the economy of Edinburgh and the city region measured in terms of gross value added (GVA) increased at a faster rate than the UK economy. The increase, from £8.9 billion to just over £16bn, marked an annual average growth rate of 6.2 per cent – a pace more akin to a developing country economy.

While GVA dropped in 2009 in the immediate wake of the global financial crisis, its resilience has been remarkable. The consensus across various key forecasters is that future growth will average 2.7 per cent a year, accompanied by strong employment growth.

The city has a higher than average representation of large employers. The city region accounts for a quarter of Scotland’s businesses and, on a per capita basis, Edinburgh is home to more businesses than Manchester, Leeds or Glasgow.

It is a haven for small firms. Almost 90 per cent of all businesses in the city and city region employ fewer than 50 people. Business start-up rates compare well with Scottish standards (but lag other parts of the UK).

The city’s economy benefits from a highly skilled workforce: nearly half the working-age population is educated to degree level, more than 10 per cent higher than the Scottish and UK averages.

The city region has performed strongly in attracting inward investment, with Edinburgh recently ranked as the fourth most attractive location across Europe.

The visitor economy has continued to thrive, with the city attracting five million visitors each year. The Edinburgh festivals are reckoned to generate more than £245 million of economic output for Edinburgh and £261m for the Scottish economy. And Edinburgh airport has now become the country’s busiest.

All this and more is set out in a detailed economic review prepared by the city council this summer. It bristles with key data on how the Edinburgh city and city region economy is performing. And it provides the basis for the city’s economic development strategy, an early prototype of which will be put before the council’s Economic Development Committee next Tuesday to begin discussions.

This is a well marshalled and intelligent document. Economic watching and analysis is something this city does well, notwithstanding a chapter of right-on genuflective burbling on “zero carbon”. And it does not stint on the problems and challenges ahead – in particular the city’s ageing demographic, and recession legacies, chief of which is youth unemployment: the city has the highest proportion of school leavers not in employment, education or training out of all Scottish local authorities.

Big questions now come to the fore. How can this growth be maintained without damage to the architecture, culture and heritage of one of the most coveted visitor destinations in Europe? Should the city help deprived areas to catch up, or do more to attract high-growth winners? And how should the city house its growing population? More tower blocks? Or expansion to the west?

Whatever else may trouble us, beneath the temporary disruption of the tramworks, the fair maid of Edinburgh is very much alive and in far better health than we dared imagine. And it is still, this autumn, a beautiful place in which to live and work.

We should count our blessings more than we do. And once these wretched tramworks are completed, we will be surprised and inspired, not only by the resilience of this city and its potential, but by the treasure we have around us in a deeply troubled world.