Edinburgh can’t be taken for granted

Government must be prepared to help Scotland’s economic powerhouse through Covid crisis

There is a perception among some Edinburgh businesses and politicians that the relative success of the city’s economy has led the Scottish Government to take its capital somewhat for granted.

And those who feel this way can point to figures published in March showing the city council was due to receive government funding of £1,422 per head of population, the lowest figure of any local authority in Scotland, and nearly £400 less than the average.

Viewed from a different perspective, some may argue that this is not unreasonable. If Edinburgh’s economy is doing well, while other parts of the country are struggling, should they not receive a greater share of taxpayers’ money in the hope that their economies will improve?

Gross value added, a measure of economic performance, per head of population in Edinburgh was £44,250 in 2017, compared to the Scottish average of £25,500, a gap that has opened up over the last two decades. Edinburgh’s growth over the same period even eclipsed that of London’s.

However, a new Edinburgh council report warns that more than a quarter of Edinburgh’s economy is considered to be at “high risk” or in the sectors that are “most exposed” to the coronavirus outbreak. And this may require a change of thinking by the Scottish Government, if indeed the perception of some in the city is correct.

Edinburgh is a gateway to the rest of the country for many visitors, with tourists, investors and others often making their first stop in the city after arriving by air or travelling up from England.

But one of the strengths of its economy, tourism, has also been one of the sectors hardest hit by the travel restrictions imposed to suppress the coronavirus pandemic. The establishment of a thriving financial industry in the city has been a similar success story but, as seen in the 2008 crash, it means Edinburgh is more susceptible to global economic crises.

So there is reason to fear that this extraordinary engine of the Scottish economy might be a little more delicate, not quite the powerhouse that it has been. And, if it starts to stutter, this will not simply be a problem for people in the city, but Scotland as a whole. This means that some in the Scottish Government may need to change their mindset and be ready to help the nation’s capital in its hour of need.