BARELY a year ago, it all seemed so rosy. Edinburgh was revelling in its position as the UK's biggest financial centre outside London – a title that was having a knock-on impact on all aspects of life in the city.
House prices were continuing to soar, and a raft of development was under way which would shape the city for years to come.
Fast forward to today, and just as the Capital has enjoyed the fruits of an economic boom, the global credit crunch has imp
acted on almost every aspect of the city.
This week has seen billions of pounds wiped off the value of the Royal Bank of Scotland and HBoS – Edinburgh's great financial institutions.
Morale is said to have fallen to an "all-time low" among the city's 31,000 finance workers as they wait to find out whether their jobs will survive the upheaval.
And as house prices fall, and the dole queue lengthens, there were fresh warnings today that the city council will have to deal with a rise in homelessness in the near future.
It was all very different a year ago, as the dramatic fall in share prices of the city's financial heavyweights shows.
Back then, they were still racking up hefty profits, and passing them on to their predominantly Edinburgh-based staff, who were able to re-invest them throughout the city – particularly the property market. Today, city bank workers spend their days glued to their screens as the share price tumbles, and their jobs become less secure with every dropping digit.
Most RBS employees at the bank's historic base on St Andrew Square and its massive Gogarburn HQ are staying tight-lipped about their prospects.
But one, who agreed to speak to the Evening News anonymously, gave a hint of the mood enveloping workers.
They said: "It's all anyone's talking about. Every two minutes someone is shouting out: 'Have you seen the share prices now?'.
"Some of the older staff, who have been here for 20 years or more, aren't that worried. They're saying they just need to ride it out, but most people are worried.
"I'm worried about my job. If we do merge with another company, then jobs will go. We know what happens when there's a merger because we've seen it with the Dutch bank. At the moment they're not replacing staff when they leave, so if we're taken over it'll be even worse."
Over at HBoS the job fears are more immediate – staff are waiting anxiously for the result of the projected takeover by Lloyds TSB, and what it will mean for the future of their Edinburgh HQ.
A spokesman for the Unite union, which represents many HBoS and Lloyds TSB workers, said an emergency meeting would be held today to draw up plans to protect its members.
He said: "People are obviously very concerned at the moment. Morale is at an all-time low. They think they are being kept in the dark – they've not been given any information about this takeover and what it'll mean to them."
One HBoS employee said no-one knew what to expect.
He said: "People are all wondering what's going on. The only thing they've confirmed is there are going to be enhanced redundancy packages if there are job losses – people will get a month's salary for every year they've worked here.
"Morale is at rock bottom in intelligent finance and in the contact centres. They're all convinced people will lose their jobs. There's also concern in the mortgages department – they aren't exactly busy at the moment. But I think other areas are less likely to be affected. Everyone's working hard at the moment, as we all have a review at the end of the year. The slackers are getting their fingers out now.
"A lot of people are constantly checking the share prices, but some are just getting sick of the whole thing."
The city council earlier this month set up an emergency cross-party group to discuss the impact of the financial crisis on the city.
Officials have warned of mass job losses, service cuts, industrial action, and falling tourism revenue all impacting on the city.
Councillor Paul Edie, the city's housing leader, today said homelessness was also a very real concern.
"If people lose jobs, sometimes they lose their house as well and that will add to homeless stats.
"We have a good, sound homeless strategy and we will try to sort this out but the fear is that there is only so much we can do. We are already getting 150 bids a house so we desperately need more affordable accommodation."
He said that, while developers are required to make 25 per cent of new schemes affordable housing, the schemes are being developed more slowly, meaning the affordable housing is also not being developed as quickly as it needs to be.
Edinburgh's property market has already been the most obvious victim of the credit crunch. Some of the country's biggest housebuilders have made thousands of staff redundant as house sales go through the floor.
The Edinburgh Solicitors Property Centre said that prices in Edinburgh fell for the second consecutive month in August – down 1.2 per cent on August 2007. But the more dramatic drop was in the number of homes sold, which slid 57.2 per cent to only 1322.
ESPC's business analyst David Marshall said there were no indications the property market would improve in the coming months.
In previous years, big bonuses in financial services have been attributed to helping cause a surge in demand for property in Edinburgh, but most of the financial giants have scaled back bonuses this year and few are expected to be given next year.
"The last couple of years saw significant bonus payments being made but none this year clearly," said Mr Marshall. "The payments have in the past had an impact on demand because it gives people the confidence to invest and can help with deposits."
But despite recent events, Ron Hewitt, chief executive of the Edinburgh Chamber of Commerce, insisted Edinburgh's position as the UK's second financial centre has not changed.
He said: "Every single country has suffered, from Holland, the Benelux (Belgium, Netherlands and Luxembourg) countries, Spain, Italy – they're all struggling. There has been a lot of financial support but nobody is really faring any better than we have. The ratings are the same, the products and banking skills are still here and the people are still here. When all settles, we will still be in the same position we were."
BUILDING BLOCKTHE credit crunch is not only affecting those employed in the financial sector. Job losses are also being felt in other industries across the Capital – particularly the building trade.
A typical victim is bricklaying apprentice Jordan Pearce, 19, who was one of 25 apprentices laid off by Barratt Homes three weeks ago. Mr Pearce was working at the Fusion site in Granton, and was two years into his apprenticeship when the axe fell.
He said: "Rumours started flying around the building site, and then we were called in and told we were going to be laid off. I was really gutted, because it was fantastic – I was learning a trade and getting paid."
Mr Pearce, who lives with his parents, Liz and David, in Corstorphine, was earning £170 a week as an apprentice, and says he will have to sign on if he can find no other opportunities: "I've been looking for other stuff, but it's been really unsuccessful – I'm struggling. You've got to try to be optimistic, but I can't see it getting any better.
"I've sent a few letters off and been on some building sites asking about work, but it's just not happening."
The full article contains 1302 words and appears in Edinburgh Evening News newspaper.
