Financial crisis puts cloud over Edinburgh
from a long line of taxis, whose drivers complain that business travellers are
much more likely to take a bus into the city centre.
executives of Royal Bank of Scotland, the pride of the capital’s financial services
sector until it was forced during October’s banking meltdown to sell most of its
shares to the government. RBS has also stopped using the private jet in which
Sir Fred Goodwin, former chief executive, visited his international empire.
years ago, where more than 3,000 people work on a campus-style development. Arriving
in the city centre, passengers looking up to the skyline of the old town see the
impressive headquarters of HBOS, created by the 2001 merger of Bank of Scotland
and Halifax, the mortgage bank. But the merged entity has just been swallowed
in a rescue takeover by Lloyds Banking Group.
is gripping Edinburgh. From having been the most vibrant part of the Scottish
capital’s economy, financial services – or at least banking – has been transformed
in a few months into its most vulnerable sector.
the post-1987 surge in credit and housing prices and the subsequent crash. Indeed,
the city has only just witnessed its first year-on-year fall in house prices since
the Edinburgh Solicitors’ Property Centre started collecting figures in 1971.
electronics group, cut its Edinburgh workforce from 6,700 in 1989 to about 4,000
by 1992. But the resilience of financial servicesprovided a cushion.
– including Edinburgh – in spite of the recession.
where 31,000 people work in financial services – 10 per cent of the total workforce,
including many of the capital’s best paid employees. RBS and HBOS are at the head
of the queue for government bail-outs.
said of HBOS’s demise: “The full impact of this takeover on jobs and economic
prosperity in the city is not yet clear. However, it highlights starkly the city’s
dependence on jobs in a small number of key companies in one particularly dominant
employees. Rationalisation is inevitable, given that more than half the forecast
£1.5bn of annual savings from the merger are predicted to come from the retail
group’s total of 170,000.
who helped smooth the takeover of HBOS, said he was “extremely concerned” about
local employment. The chancellor represents an Edinburgh seat, so will have lots
of worried constituents.
brewer, the Edinburgh-based Scottish & Newcastle, was sold to Heineken and
Carlsberg for £7.8bn.
have long-term “spillover” effects on the local economy. Their purchasing power
helps develop business, legal and information technology services. Headquarters
can also boost the “business birth rate”, attract and retain talent, and sponsor
Conference Centre. Since it opened in 1995 the centre has bolstered the city’s
tourism sector, which accounts for about 25% of Scotland’s tourism earnings.
will suffer from a reduction in corporate sponsorship as the recession bites.
And, as Mr Anderson told the council: “Evidence is beginning to emerge of a reduction
in tourism visits and spending.”