Edinburgh's double whammy

Edinburgh has been rocked in recent weeks, by the double whammy of HBOS and RBS. The twin pillars of the city's economy have been in the news for all the wrong reasons. The once-secure financial services industry here is now coming to terms with the prospect of serious job losses, and knock-on effects on the wider economy.

I'm in the Scottish capital this week, at the annual Edinburgh city-region conference. A few months ago, we would have been celebrating the strength and dominance of financial and business services - which together employ 31% of the city-region's population. But today, we were trying to work out how many jobs would be lost. See what I had to say on last night's Newsnight Scotland (about 10 minutes in).

The Edinburgh city-region entered the recession in pretty good shape - with an employment rate of 77% (well above the UK average).  Its financial and business services sector is also very diverse - not just banking, but fund management, asset servicing, pensions and insurance too. It's the 18th biggest global financial centre. But it's now clearly exposed to the shake-out in the financial markets, and is facing thousands of job losses.

The capital's city-region also has a large public sector - 30% of total employment - which will provide a cushion in the year or two ahead. But the reality is that Edinburgh and its surrounding towns and cities are now entering their worst period in decades. 

We're doing work at the moment, on the impact of the recession on Leeds' financial services industry - so there may well be lessons in there for Edinburgh. Results of that will be out next month.