Economic year ahead: 'We have optimism, but it is guarded'

As we report today, unemployment has fallen year-on-year in the Capital by 3.4 per cent, with the benefits felt in almost every area.

At a time when the jobless rate is rising across the UK as a whole, it is undoubtedly a small but significant step in the right direction.

A glance around the country confirms just how well we are currently faring on this score, with 2.3 per cent of the working population now claiming Jobseekers Allowance in Edinburgh, compared to roughly three times that level across large swathes of Glasgow and around 10 per cent in parts of the worst affected city in the UK, Birmingham.

Not that anyone should get carried away - after all, one swallow does not make a summer and, as we look into 2011, dark clouds remain on the horizon. The abrupt closure of Waterstone's at the east end of Princes Street by the troubled HMV group highlights the fragility of some of the high street's big names.

And we all know that the long-feared public sector cuts will only begin to take effect in earnest in the coming months. With one of the highest proportions of such jobs in the UK, Edinburgh could take a hard hit.

Across the country as a whole, economic growth in the coming year is likely to remain sluggish at best, but the city's falling unemployment rate is not an isolated sign of hope.

Business confidence is growing and there are encouraging signs in the increasing number of new firms being created and planning applications for development being lodged in the Capital.

Only this is for certain - the year ahead is unlikely to be anything other than a tough one for most of us. We have optimism, but it must be of the guarded variety.

But we should nevertheless feel free to share some of the confidence that two of the UK's biggest retail brands, Tesco and Virgin, have shown in Edinburgh in recent months by choosing the Capital as bases for their new bank ventures.