During the past two decades, the Scottish economy has undergone an important transformation that has helped bring Scotland to the forefront of social and economic development. As Scotland’s capital city, Edinburgh has played a crucial role in this transformation and is now recognised as one of the most prosperous cities in the United Kingdom. This is undoubtedly good news for entrepreneurs looking to set up a business in the Scottish capital.

Edinburgh’s economy

The Scottish government has capitalised on Edinburgh’s potential to become an economic powerhouse, and the strategy has had excellent results. Currently, Edinburgh has a GDP per capita in excess of £49,000, a figure that is only surpassed by the GDP levels of the British capital. But the city’s strong economic growth levels are also in line with other key global players. A recent fDi Magazine survey listed Edinburgh as the third best-ranking city of the future in terms of business friendliness, quality of life, economic potential, and skills pool, placing the city ahead of major business hubs like Paris and Berlin.

The latest data set released by the local city council reveals that key economic indicators in the city have been following an upward trend for several consecutive quarters. This is the case of the city’s macro-economic environment (measured in terms of output per resident and currently set at £38,000 per person) and in the foreign direct investment rates, whose ongoing increase has created nearly 600 new jobs over the past 12 months. Business density in Edinburgh is another positive indicator, and at 93 companies per square kilometre, is among the UK’s highest. All these factors have had a positive impact on overall business confidence levels, which have been rising for three consecutive years and are nearly 28 per cent higher than in 2012.

Key industry sectors in Edinburgh

The 2014 Global Financial Centres Index listed the Scottish capital among the world’s best-rated cities for businesses in the banking, insurance, and finance sectors. There are approximately 35,000 people working in this industry all over the city, which is also home to 90 per cent of all fund managers in Scotland. Some prestigious financial companies that have chosen to be based in Edinburgh include JP Morgan Europe, Scottish Widows, Standard Life, AEGON, Bank of New York Mellon, Royal Bank of Scotland, and Quayle Munro.

The city is also a key European destination for companies in the life sciences sector, especially in areas like the Science Triangle and Edinburgh’s BioQuarter. IT, software development, and the creative sector are also experiencing constant growth.

Edinburgh is a major tourist destination that attracts over 4 million visitors a year. The tourist and hospitality sector has experienced unprecedented growth levels for the past three years and currently employs 28,000 people. Tourism-related activities in Edinburgh account for nearly 18 per cent of the Scottish total GVA.

The retail industry has also boomed in recent years. According to a recent Tourism in Edinburgh survey, the city’s shops have experience average expenditure increases of over 3 per cent, and footfall levels are set to keep increasing.

Employment, skills, and start-ups in Edinburgh

Over 73 per cent of the Edinburgh’s working population is employed, and the city is renowned for having a large and diverse skills pool made up by high-calibre graduates and experienced professionals, which make up more than half of the working population. It is expected that over 20,000 new jobs will be created by 2022.

Start-up support is clearly strong in Edinburgh. There are currently nearly 20,000 small and medium-sized enterprises registered in the city. The number of business incorporations has grown by 2.7 per during the first quarter of 2015 alone, and start-up survival rates are set at an impressive 54.4 per cent. In addition, one of Edinburgh’s four priority investment zones (the city’s South East) has been specifically created to support start-ups and new business ventures in high-value fields like biotechnology, pharmaceutical research, and advanced engineering.

Government schemes and support for start-ups in Edinburgh

New start-ups can find professional guidance and support through the range of services offered by the Business Gateway Edinburgh initiative. Support comes in the form of free training sessions and seminars, information on licensing, trading standards, and business finance. Other schemes administered by the city council include:

- The East of Scotland Investment Fund, which already provided £1 million in funding and helped create over 200 jobs.
- The Small Business Loan Fund, which offers loans of up to £2,500 to qualifying start-ups.

For all these reasons and more, there has never been a better time to consider Edinburgh as a business location.

Sources:

http://www.edinburghnews.scotsman.com/news/boom-town-revival-for-edinburgh-as-economy-grows-1-3255747

http://www.gov.scot/Topics/Statistics/Browse/Business/SABS/KeyFacts

http://www.edinburgh.gov.uk/news/article/1721/edinburgh_ranked_third_small_and_mid-sized_city_globally

http://edinburgh.gov.uk/Downloads/Economy_Watch___March_2015.pdf

http://www.investinedinburgh.com/why-edinburgh/top-10-reasons/

http://www.longfinance.net/images/GFCI16_22September2014.pdf

http://www.investinedinburgh.com/why-edinburgh/development-opportunity/south-east-edinburgh

http://www.bgateway.com/local-offices/edinburgh