Scottish Cities Predicted To Bounce Back From COVID Crisis

A new economic report predicts that Edinburgh will be among the top five performing cities in the UK for employment by the end of this year, with Aberdeen bouncing back best in output.

The latest UK Powerhouse report by law firm Irwin Mitchell and the Centre for Economics and Business Research (Cebr), reveals a contrasting picture in terms of GVA* growth and employment prospects, as Scotland emerges from lockdown restrictions.

At the end of last year, Edinburgh was in the top five cites in the UK for economic output, while Aberdeen was bottom of the league table with a 7.7% annual fall in GVA.

In terms of year-on-year employment growth, Edinburgh, Aberdeen and Glasgow were among the bottom 20 cities at the end of 2020, as Covid-19 restrictions continued to bite.

By the end of this year, all three Scottish powerhouse cities are expected to see a significant recovery in output, with Aberdeen rising from bottom of the table in Q4 2020, to 13^th by the end of Q4 2021, with a 6.8% year-on-year increase in GVA.

Glasgow is predicted to be just outside the top 20 with a 6.4% rise in GVA, while Edinburgh is expected to have fallen from the top five, to the bottom 20 with a 6.2% growth in economic output.

Edinburgh is expected to surge to become the 5^th best performing city in the UK for year-on-year employment growth, with a 2.1% increase. Glasgow is set to feature in the top 20, on 0.4% and Aberdeen will be mid-table on -0.5%.

Only 36% of cities in the report are expected to increase employment levels in Q4 2021, making Edinburgh and Glasgow’s performance respectable, as businesses look to recover lost ground.

UK Powerhouse makes several recommendations to tackle the difficulties business face coming out of lockdown. These include the need to take advantage of policies to encourage investment and improve skills and local government having bespoke plans in place to support job creation.

The UK Government also needs to prioritise implementation of the TCA with as little disruption as possible to businesses and negotiating a smoother trading relationship with the EU post Brexit.

Expert Opinion

“The previous UK Powerhouse report predicted Edinburgh would perform well this year in terms of employment but that output would lag behind and that is borne out by this latest study.

“The large financial services sector means Edinburgh has been able to preserve jobs, with many people able to work from home not having as negative impact on employment as might otherwise have been the case.

“While the sting in the tail was expected to be lingering COVID impact and the end of furlough, it is clear business and government will need to be aware of the risks presented by Brexit.” Mark Higgins - Chairman of WJM, Chairman of Ascent, and Partner of Irwin Mitchell