FRIDAY afternoon on George Street, Edinburgh, one of the most prestigious shopping streets in Scotland. As the public holiday gets under way, locals and tourists are browsing the aisles of the street's designer boutiques, but much of the shopping seems to be of the window variety.
Just a minute's walk away, Princes Street is devoid of traffic and looks like a building site. Unsightly orange and white barricades surround its tramworks, which are over budget and not expected to run until 2011. Nearby, the £300m Caltongate develo
pment off the Royal Mile, with plans for a five-star hotel and conference centre, has stalled. Down on the city's waterfront, a vision for a new £500m Guggenheim-style modern art gallery have been abandoned. The city's confidence is, uncharacteristically, at a low ebb.
As recently as last summer, business was booming in Scotland's capital with cash flowing around the city from many thousands of securely well-paid professionals. Designer outlets such as Harvey Nichols clothed them and Michelin-starred chefs fed them. Well-heeled bankers made a sport of outbidding each other for the best homes, and raced to put their children's names down for the top private schools. Edinburgh's workforce contributed more towards the national economy than any other city in the UK – even outstripping London. Edinburgh's most prosperous areas had the air of a middle-class idyll.
Fast forward to the here and now, and the pressure is on. Thousands of jobs are being axed at the beleaguered Royal Bank of Scotland. Where once its gleaming world headquarters represented phenomenal success for the city – a purpose-built "village" with its own hair salon, florist, nursery, shops and gym – workers now face redundancies and uncertainty.
While a Labour government has effectively nationalised the banks to stabilise savings and jobs, the Conservatives last week warned they may break up the state-supported banks if they win the next election, throwing the job security of staff at the head offices of RBS and Lloyds HBOS in Edinburgh into unprecedented uncertainty.
The worst predictions are that 40,000 of Edinburgh's half-million population will lose their jobs over the next two years. Retailers and restaurants are coming under increasing pressure. A typical casualty is the upscale French eaterie Duck's on the fringes of the New Town – once full of pinstriped suits at lunchtime and now empty with a sign in the window saying "available for private hire". Houses are selling at "offers around" instead of 25% over the asking price and private schools admit many parents are asking for help with fees. The city's dinner parties – once a place for comparing pleasant lifestyles and exotic holidays – are becoming self-help seminars and an excuse to drown sorrows.
In other parts of Scotland there has often been a view that Edinburgh was a bit too big for its boots. And so a hint of schadenfreude can be detected as the Athens of the North struggles with its new-found difficulties. But can Scotland really afford for its capital city – its shop window to the world – to hit a truly bad patch? And what can do done to stop a crisis of confidence turning into a real crisis?
Last week the Scottish Government announced plans for a new nationwide council house building scheme, the biggest of its kind in 30 years, with almost £1.7m for new social housing in the capital alone. The move was welcomed by Independent Lothians MSP Margo MacDonald, who has long campaigned for what she calls "houses for folk who don't earn a fortune". It signalled the Government's acceptance that many Edinburgh residents are going to be struggling to put a roof over their heads in the coming years.
MacDonald says: "Things started getting difficult last year when it was accountants and lawyers losing their jobs, but now, as well as the loss of bank jobs, I am certain there will be cuts in public spending here."
Edinburgh is already hurting. The Caltongate development, a plan to create a five-star hotel and conference centre, 200 homes, office blocks and a public square, has been shelved after owners, Mountgrange, went into administration. Its bold and uncompromisingly modern design has brought out the city's innate conservatism and sparked a vocal campaign to halt it for good. The city is now left with a large hole in the ground in the middle of a World Heritage site. A flagship cultural centre in Leith will be shelved for years due to a lack of funding. It had been hoped a derelict site at Britannia Quay would become home to Edinburgh's answer to the internationally acclaimed Sage centre in Gateshead.
While doubts linger over these plans, Edinburgh's controversial trams project – opposed by the SNP Government and a source of much moaning among many of the city's residents – has only just got under way. About £215m has so far been spent and there are fears the project is running more than a year over schedule and tens of millions of pounds over budget. Its undoubted benefits remain theoretical and distant. Elsewhere major attractions for locals and tourists alike are closing for repairs. The Royal Commonwealth Pool is about to close for two years for refurbishment while the National Portrait Gallery is also closing for an overhaul.
It is a depressing litany of problems. But according to Dr Alastair Durie, an expert in tourism at Stirling University,
tourists do not expect Edinburgh to be efficient and glossy like other European cities. Rather, they anticipate a "charming, ramshackle Brigadoon economy". He says: "We can do that in spades. What people are coming for is the New Town, the Old Town, Holyrood Palace and the Castle, and that doesn't change. Things like the tram chaos won't stop people coming – but it may deter them from coming back."
Others are unfailingly optimistic about Edinburgh's future.
Tom Buchanan, SNP councillor and convener of its economic development committee, says he recognises that the collapse of the banking sector is a "huge blow", but he insists the city is not suffering a crisis of confidence. Instead, he points out, investment continues and there is sufficient interest in Scotland's capital for it to withstand its current woes.
"We have 30 live inquiries by hotel developers looking at Edinburgh and they wouldn't be coming forward if they thought everything was just gloomy," he says. A number of overseas financial institutions remain interested in investing in Edinburgh, as well as Tesco Bank, drawn by a well trained financial workforce who are willing to work competitively. "I have had all sorts of inquiries across my desk, so they are not ignoring us. People are still interested in Edinburgh."
On the streets of the nation's capital yesterday, shoppers and tourists were equally buoyant. Eric McRory, a 50-year-old economist, said: "I think that this is an opportunity to develop a 'green recovery'. The Government has got the chance to develop action focused on the environment that could generate new job options and, at the same time, could mean an investment for the recovery of the economy and the future of the city."
Analysts predict the city's economic future, though positive, will be a different shape from its past. While its financial sector will remain an important part, the capital and its inhabitants will also have to diversify into the kind of industries more closely associated with Glasgow and Dundee. There is the burgeoning life sciences sector such as the Bioquarter project, which is expected to position Edinburgh as one of the world's top 10 hubs for life sciences research and development. The city is also increasingly seen as a vital centre for graphic design, advertising and architecture. Video animation firm Rockstar North, makers of the violent console game Grand Theft Auto, is now a jewel in the city's economic crown and a sign of hope for the future. What Miss Jean Brodie would make of that, we'll never know.
The full article contains 1324 words and appears in Scotland On Sunday newspaper.
