Michael Kelly: In the west every silver lining has a black cloud

That's not a vainglorious boast. It's a fact that can be backed up by the statistics laid out by the report of the Glasgow Economic Commission.

The document produced by this private sector-dominated body chaired by Professor Jim McDonald, principal of Strathclyde University, begins with the irrefutable statement that Glasgow is Scotland's largest city and is the heart of its only conurbation - population 1.2 million.

The Clyde Valley city region generates 32 per cent respectively of Scotland's Gross Value Added, offers 35 per cent of all Scottish jobs, houses 34 per cent of Scotland's population and is responsible for 30 per cent of all active business in Scotland. A third of Scotland.

Happily, Glasgow appears to be working. Because its economy, with a Gross Value Added of 35 billion, is 60 per cent larger than any other Scottish regional economy, comparisons are more usefully made with Glasgow's other provincial city competitors. The comparisons are encouraging for those who have overseen the regeneration of Glasgow. Since 2000, Glasgow has generated more jobs, including twice as many private sector jobs, than its main UK competitors Birmingham, Manchester and Leeds.

Between 2000 and 2008, Glasgow recorded jobs growth of 49,600. This was an increase of 14 per cent significantly more than Leeds' 8 per cent increase, Manchester's 7 per cent or Birmingham's meagre 2 per cent.

The extent of Glasgow's transformation is astonishing even - or maybe especially - to those who were involved in trying to make it happen. This is the dirty, dangerous, deprived city of the postwar period. In the 1950s, 60s and 70s this was the city which every dispersed London civil servant fought tooth and nail to avoid. It was the city that lost out on inward investment because the wives of the chief executives making the location decisions wouldn't even look at houses there. It was the city which foreign tourist guides advised bypassing because of the level of crime. That this city should now be the busiest retail centre outside of London and should be home to a burgeoning business and leisure visitor industry suggests more of a miracle than the fulfilment of a civic strategy.

The report of the Glasgow Economic Commission details the ways in which this progress can be maintained. Perhaps too much emphasis has been placed on the need to improve transport connectivity. The public investment needed to extend High Speed Rail is not going to be offered by the UK government.And with the Scottish Government's intervention to cancel the rail link between the city and its airport, Glasgow will simply have to get on without it.

Much more significant is the report's insistence on the part that the private sector has to play. The greatest strength of the city and the one which saw it through its darkest days of decline is the fact that the private sector never abandoned the city in the way in which business leaders bailed out of other post-industrial towns, notably Liverpool. There existed through the business community and individual businessmen a continuing, though muted and dormant, belief that the city was still a place where money could be made. However, as the business and political leadership grew apart over decades, the civic impetus that drove Glasgow through the Industrial Revolution and its great municipal project was lost. The Corporation became solely concerned with micro matters. However, what was left, like Hope at the bottom of the box, was a psychological resilience that allowed the city to bounce back.

I discovered that in my dealings with business in the 1980s, and this report confirms that the "can do" attitude, this "arrogance'' still exists. Thus its key recommendation that a private/public leadership body is set up is along the right direction. However, as the Labour Party both nationally and in Scotland is finding, leadership is more about the personality of the leader than about structures. From where will these Glasgow leaders emerge?

While we now have a blueprint for the long term, there are still a series of short-term hurdles which the city has to jump. First, there is the successful staging of the Commonwealth Games in 2014 and the delivery of their legacy. The city would find it difficult to recover from a shambolic Games. From all reports the physical works are on time or ahead of schedule. But the first warning sign appeared with the dismissal of the chief executive of Glasgow 2014. Despite being a key stakeholder, the city council has been offered no detailed explanation of incident. They are pursing their own enquiries, including an attempt to make the Games body subject to Freedom of Information legislation. Unless the veil of secrecy lowered by Glasgow 2014 is lifted, the matter could fester and become a political sore.

And politics will be at the heart of progress in Glasgow. Just as in the 19th century when Liberals ruled both city and industry, Glasgow has done best in the last 30 years when national and municipal government have been of the same persuasion. Not only is this not the case just now but we have a UK Tory-led coalition that owes the city nothing and which is mirroring Thatcher's hostility. Plus the SNP is specifically targeting the city for next year's local elections against a shaken Labour Party. That can only mean war.There is the clear prospect that such co-operation as exists will break down as each side resorts to a blame game in the competition for the votes of citizens. Would it be too optimistic to expect politicians on all sides with Glasgow's interests at heart to put these party differences aside and announce an agreed programme to take the city on the next stage of its route to recovery? There's more chance of a sunny Fair Friday.

• Michael Kelly is a former Labour Lord Provost of Glasgow