Edinburgh hotspot: What makes the Scottish capital the top city outside of London over the past decade

Edinburgh has emerged as the best performing city outside of London over the past decade, leading to some of the most expensive house prices and office rentals in the UK.

The Scottish capital stood out for high levels of productivity, income, employment and health. It was ranked first for gross household disposable income per head of population (£24,161 in 2021) and had the highest percentage of its citizens in good or very good health (86 per cent).

The Local Heroes report by OCO Global examined 37 data points covering economic, prosperity, wellbeing, property and educational trends over the past decade. The cities were ranked as “top tier” (Edinburgh), “booming” (Belfast, Manchester and Bristol), “solid performers” (Cardiff, Liverpool, Leeds and Newcastle) and “moderates” (Birmingham, Sheffield and Nottingham).

Edinburgh emerged as the top performing city in the economy, wellbeing and prosperity categories.

The top performing cities for each sector were Edinburgh (economy, wellbeing and prosperity) and Bristol (education and prosperity). The lowest ranked were Sheffield (economy and education), Newcastle and Nottingham (prosperity) and Birmingham (wellbeing). The study also found that while economic performance was improving across the 11 cities examined, unequal distribution of funding from Westminster and a lack of city-level control over how funding is being spent is exacerbating rather than redressing regional inequalities.

The findings point to a wide disparity in the amount of money each city received from “levelling up”, city deals and shared prosperity funds. Of the £6 billion or so allocated from these sources, cities classed as “boomers” received on average £748 per head compared to £420 for solid performers and just £133 for moderates. Edinburgh received £616 per head, due primarily to less money being provided through the levelling-up fund.

The report concluded that although there was no one model for successful city growth, the best performing cities were those which combined high levels of funding with “effective” devolved powers.

Mark O’Connell, executive chairman of OCO Global, said: “Levelling-up policies are meant to redress decades of structural imbalance between UK regions, but the study suggests that the way funding is allocated is actually helping exacerbate those inequalities. Funding tends to go to cities which are best at applying for it rather than those with the most need. It gives a further advantage to already booming cities which can demonstrate they are successful at spending funds.

OCO Global's Local Heroes report examined 11 cities outside of London.

“This centralised funding system isn’t giving enough consideration to unique local challenges, or the different areas different cities excel in. If we really want to unlock cities’ potential, we need to match political devolution with economic devolution and give elected mayors the authority and resources to make long-term plans to meet the needs of their economy and citizens. A good example of this is Manchester’s decision to successfully take the city’s transport system back into public hands.”

The 11 cities chosen outside of London were a combination of regional capitals, city regions incorporating multiple local authorities working together and other key cities. Belfast had the highest GDP - gross domestic product - growth per head while Greater Manchester attracted the most international investment.

O’Connell added: “While there is undoubtedly a strong correlation between funding and success, cities also have their own agency. Although they need to ask why funding isn’t being distributed equally, cities with proactive policies to improve connectivity and wellbeing, enhance skills and inclusiveness in the workplace, and promote themselves as investor-friendly can succeed.

“All of the cities in the report grew, but they excelled in different areas. Consequently, there is no one-size-fits-all-strategy to deliver growth. Rather than wait for Westminster to provide a lead, city authorities need to identify their own regional strengths and weaknesses, ensure that elected mayors have more discretion to allocate money locally and develop bespoke growth strategies.”

While Edinburgh stood out for its high levels of productivity, income, employment and health, this helped consolidate the city’s attraction as a desirable location, OCO Global noted, leading to some of the most expensive house prices and office rental costs of any city in the study.

Meanwhile, Birmingham has both the largest student population and the highest proportion of people without qualifications while wellbeing issues were found to be hampering growth in Leeds, Liverpool and Newcastle. Nottingham had one of the smallest economies, but the study suggests that lower house prices and office rental costs alongside a large and growing university base could be the basis of a “compelling offer to investors”.

With its strong mix of finance, business innovation, tourism and academia, Edinburgh frequently tops polls relating to attractiveness and investment. Last year the city was hailed as the top spot for innovation in the UK beyond a “Golden Triangle” cluster of cities in the south of England.

A report by the British Business Bank found that there were 475 equity deals, worth a combined £710 million, involving technology and IP-related businesses in Edinburgh, Fife, Midlothian and West Lothian between 2011 and the second quarter of 2023. It meant that the Scottish capital and its surrounding area was ranked as the UK’s top innovation-led cluster for the number of equity deals outside of the Golden Triangle of Greater London, Oxford and Cambridge.

However, a study released earlier this month suggested that Edinburgh was losing out to other parts of Scotland as the best place to start a business. Clackmannanshire was singled out as the best place for starting-up north of the Border, while Edinburgh was ranked only seventh. Software firm MRPeasy analysed data from the Office for National Statistics on business openings and closures in each UK local authority between 2022 and 2024 to compile its report.

Investment hotspot: Edinburgh top for innovation in UK outside 'Golden Triangle’