finance

Edinburgh comes second in ranking of cities best surviving the Covid crisis



A new economic study has shown Edinburgh survived the impact of Covid-19 better than most UK cities, but that by the end of next year, it may be among the slowest growing in terms of output.

The latest UK Powerhouse report by law firm Irwin Mitchell and the Centre for Economics and Business Research (CEBR), revealed that the Scottish capital is expected to see the second smallest economic contraction of all UK cities by the third quarter of this year, with an annual fall in economic output of 7%.

It was the only Scottish city to make the top 10, which was led by Reading, with Brighton, the City of London and Sunderland rounding out the top five.

Mainly due to its large financial services sector, Edinburgh’s economy has not been impacted as much as other Scottish cities. Most financial services firms have been able to maintain services, with employees working from home, allowing the sector to emerge lockdown relatively unscathed.

However, the forecast for the year ahead projects Edinburgh will be one of the five slowest growing cities in terms of output, together with Manchester, Leeds and London.

All the ‘Scottish Powerhouse’ cities – including Aberdeen and Glasgow – are forecast to be in the bottom ten in terms of annual gross value added performance by the end of the fourth quarter of next year.

In terms of employment prospects in 2021, Aberdeen is expected to be in the top 20, with 6.5% year on year growth. Edinburgh and Glasgow are lower down the list on 5.9% and 5.8% growth respectively. But by way of contrast, London is bottom of the employment list, down 5.4%.

Of the top five UK cities to have used the furlough scheme this year, Glasgow was in second place, with 34% by share of the working population up to 31 July.

Mark Higgins, partner and head of the Irwin Mitchell Glasgow office, said: “Given that Edinburgh’s economy contracted the least, it’s not surprising it has less to gain next year.

“Aberdeen is projected to see good growth in employment, and with Edinburgh and Glasgow posting modest gains too, this is good news – but with a sting in the tail.”

He added: “The UK economy grew by 15.5% in the third quarter of this year, but only on the back of a record 19.8% contraction in the previous quarter.

“With the unknown of Brexit still on the horizon, next year still promises a bumpy economic ride in Scotland and the government will need to take steps to ensure that any fragile recovery has the support it needs to avoid a wider crisis.”



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