23.06.2008: CAPITAL HEADS UK'S ECONOMIC TABLE

Edinburgh has the strongest economy in the UK, outstripping even London, a report has revealed. People in Scotland's capital produce £10,000 more a year for the economy than the UK average.

Experts believe the city's success is down to its status as a leading centre for the financial services industry - the home of companies such as Standard Life, the Royal Bank of Scotland and Halifax Bank of Scotland.

They also say creation of the Scottish Parliament and Scottish Government has fuelled the boom. But findings have ignited debate over the uncertainty of Scotland's constitutional future and the merits of plans to introduce  a 3p local income tax.

Only Berkshire, which relies on London commuter belt wages, scores higher than Ediburgh's £28,432 produced per person. And if London commuter belt areas are removed, Scotland has three cities in Britain's top ten, with Glasgow seventh and Aberdeen ninth.

Edinburgh beats London beacuase of the UK capital's high house prices. The figures in the report, by Scottish chartered accountancy firm Campbell Dallas, are based on Office for National Statistics findings for 1995 to 2005, the latest available, so are not taking into account the problems of the recent credit crunch.

David Lonsdale, assistant director of CBI Scotland said: "This report reflects on the success story Edinburgh has been. But obviously, given recent events with the financial markets, it is important that the UK and Scottish governments help consolidate its status. "I don't think  uncertainty over independence has had much effect, but companies are keeping an eye on what happens".

But labour warned that the Nationalists' push for the independence might undermine Edinburgh and Scotland's success. Iain Gray Labour's finance spokesman said: "These statistics show that Edinburgh has benefited hugely from the 11 years of a UK Labour governement. But this growing prosperity is put at risk by the constitutional uncertainty caused by the current SNP government and the misguided plans to introduce a local income tax.

"Edinburgh's seismic growth is under threat if the SNP succeeds in making Scotland the highest-taxed part of the UK." The report follows the Governement Expenditure and Revenue Scotland (GERS) report last week, which showed that if Scotland claimed its 83 per cent of North Sea oil revenues, it would be performing better than the rest of the UK. The Scottish finance secretary, John Swinney, said that Campbell Dallas report underlined GERS's findings.

A spokesman for Mr Swinney said "While there is no room for complacency, the Scottish economy compares favourably to the UK, with retail sales and house prices holding up well. "Scottish growth outperformed UK growth in the last two quarters, and our labour market continues to outperform the UK average". He added that replacing the council tax with a local tax income would mean a tax reduction in Scotland and said businesses had responded positively to the SNP government.

Publication: The Scotsman

Date: 23rd June 2008