Economy of Edinburgh

Edinburgh has consistently been one of the most prosperous parts of the United Kingdom. It has been in good economic health since the arrival in 1999 of the Scottish Parliament, which had a so-called “headquarters effect", with many government departments being set up in the city, resulting in an increase in recruitment and employment. Some ancillary economic undertakings have since set up around this new seat of government. Unemployment rates are amongst the lowest in the country and job creation rates some of the highest. Edinburgh’s population is also growing rapidly, mainly through inward migration from overseas and, particularly, the rest of the United Kingdom. This strong growth is, however, leading to pressure on the green belt, particularly in the west of the city as office and housing developments compete for space.

The economy of Edinburgh is largely based around the service sector, with tourism and financial services banking being particularly important; education and high tech research. The Bank of Scotland was founded in 1695, by an act of the original Scottish Parliament, and is now part of the HBOS group, who have kept their headquarters in Edinburgh. The Royal Bank of Scotland was founded in 1747 by Royal Charter and is now the fifth largest bank in the world by market capitalisation. In 2005 they began the move into their new purpose built headquarters at Gogarburn, near the Edinburgh City Bypass. Edinburgh is the second largest financial centre in the United Kingdom after the City of London and the fifth largest in Europe.

The New Town and city centre has traditionally been home to many companies, but modern needs have caused many to relocate. Immediately to the west of the city centre is the Terry Farrell master-planned Exchange business district, which now houses major employers such as Scottish Widows, Standard Life, the Clydesdale Bank and Baillie Gifford. Edinburgh Park is a business park located in the west of city, near Edinburgh Airport, and it now has its own railway station. Following the opening of the Royal Bank’s new headquarters, there will be around 20,000 people working in the western outskirts of the city.

Important nowadays are shopping centres and retail parks, including a few located in the suburbs and on the edge of the city. The St James Centre and Princes Mall started in the East End in the 1970s, then Cameron Toll in south Edinburgh in the 1980s. More recent developments are the Gyle centre next to Edinburgh Park, Ocean Terminal in Leith and the retail parks at Hermiston Gait, Straiton and Fort Kinnaird which are all next to the Edinburgh City Bypass. Edinburgh has many modern supermarkets in its suburbs which offer a more day to day type of shopping. Good examples of prominent ones are Sainsbury’s in the Cameron Toll centre, ASDA in the eastern suburbs close to the City Bypass, Tesco Extra at Corstorphine and Morrison’s at Crewe Toll.

Brewing is a traditional industry, and while the closure of the Fountainbridge brewery in 2005 leaves Caledonian Brewery as the largest brewery in the city, Scottish & Newcastle still retain their headquarters in the city.

Tourism is another important mainstay of the economy of Edinburgh. Edinburgh is the country’s most popular tourist destination in terms of visitor numbers, and the second most popular in the UK after London, with numbers growing substantially each year, particularly in the budget travel and backpacking sector, assisted by the growth of Edinburgh Airport and direct rail links to the rest of the country. The annual Edinburgh Festival attracts large numbers of people, as does the Hogmanay street party each New Year. The Edinburgh Festivals in August alone generate in excess of £100 million for the Edinburgh economy.

Another major element of Edinburgh’s tourist industry is conference and business tourism which is another major contributor to the economy.

On March 12, 2004, Edinburgh was granted Fairtrade City status.