Scots cities better placed to avoid double-dip recession, say analysts

SCOTLAND'S major cities are in better shape than those elsewhere in the UK to avoid a double-dip recession as economic recovery is "unevenly spread" across the country, according to a new study published today.

Many areas were "bouncing back" from the recession, with Aberdeen at the forefront of those cities set to grow despite looming public-sector cuts.

Research group Centre for Cities said Scottish cities were likely to be more insulated from the damage of cuts than centres south of the Border, although they would still be affected.

The annual report put Aberdeen, Dundee, Glasgow and Edinburgh among the UK's top ten cities when comparing the number of business start-ups with the number that went under during the recession.

But cities such as Glasgow face some of the highest cuts to welfare per capita, with an expected drop in Scotland's biggest city of 175 for each resident. Only Edinburgh is showing population growth, while Dundee's population was the fastest shrinking out of 64 cities in the UK.

Centre for Cities analyst Paul Swinney said the report was forward looking, in an attempt to assess the effects of public sector cuts.

He said: "Public spending cuts will hurt cities in Scotland and that will have big impacts for people whose benefits will be cut or will lose jobs. But on the whole, it seems Scottish cities seem to be in good position to grow and recover from the recession. A double-dip recession would seem less likely in Scottish cities.

"What we would like to see now is more power devolved down to city and regional level so that political decision-makers have the right policy levers to pull. Give cities more power to respond in more flexible ways."

Aberdeen business leaders said the report was not a surprise but was a welcome boost to their efforts to continue growth. Chairman of Aberdeen City and Shire Economic Future Tom Smith said: "The resilience of our local economy, largely due to our robust energy industry, is well recognised.

"This study, coupled with recent announcements about positive North Sea forecasts, increases confidence in the region which will in turn translate into tangible investments across all sectors."

The report, titled Cities Outlook 2011, found that average weekly earnings had gone down slightly in Edinburgh since 2006, but up in Glasgow, Aberdeen and Dundee, which was ranked second in the UK for wages growth.

CBI Scotland director Iain McMillan said: "We will all benefit from the recovery but in different ways and in different times.There's going to be a contraction in public sector jobs and that's inevitable given that the UK has to tackle the structural deficit.

"I think it will be a little time off before the levels of unemployment turn down."

The report ranked Edinburgh and Glasgow having two of the highest levels of inequalities in the country, based on job seeker's allowance claimants within the different parts of the cities. Glasgow has the fifth biggest gap while Edinburgh has the seventh.

Researchers said the number of welfare claimants in Glasgow and Dundee remained some of the highest in the country but were relatively unchanged between 2009 and 2010.

A Scottish Government spokesman said: "This report underlines the urgent need for Scotland to gain financial responsibility as the only positive alternative to that Westminster cuts agenda."

A city may face big challenges, but show resilience and vibrancy on many fronts which can make a signifcant contribution to its longer-term economic performance. Page 26