Good growth in Edinburgh

Edinburgh is one of the UK’s most prosperous cities, with strong performance across economic and social indicators. But beneath this success there is a more complex reality – one where inequality, housing pressures and workforce challenges risk undermining long-term progress. As the city reaches an inflection point, targeted strategies and a new revenue stream promise to improve how growth is delivered and who benefits from it.

Signs of growth on the ground

Edinburgh hit a new milestone in June 2025, overtaking London in GDP per head for the first time. This growth reflects a mix of long-established strengths in financial services and higher education, alongside relatively newer specialisms in life sciences and technology. The city’s growth, strong research base and skilled workforce has attracted global interest – 27 foreign direct investment projects have been secured over the past year.

This kind of economic growth and investment doesn’t always translate into tangible benefits for the public, but there are signs that Edinburgh’s residents do stand to gain from its impact. The city climbed to second place in our Good Growth for Cities Index this year, scoring well across a range of indicators, including youth and adult skills, high streets and shops, and work-life balance. These results suggest the city’s economic expansion is leading to improvements in quality of life and opportunity. However, lower scores in home ownership and income indicate that not all residents are seeing these benefits.  

Responding to pressure on housing

The supply of affordable homes in Edinburgh has not kept pace with demand. The city has the lowest proportion of social housing in Scotland, and pressure on this limited stock is intense. At the same time, Edinburgh has some of the highest private rents in the country, pushing many individuals and families towards an already critically overstretched social housing sector. In fact, Edinburgh declared a housing emergency in November 2023 due to significant pressures on the city's housing market, including homelessness rates and housing costs.

The lack of affordable homes is deepening inequality and pushing people to live further from jobs, schools and services. This, in turn, is impacting local businesses, with roles harder to fill as people are priced out the centre – particularly early-career professionals, lower-paid workers, and families on moderate incomes.

The Council’s 2025-2030 housing strategy focuses on significantly expanding the supply of affordable housing, improving housing quality, and linking homes with access to jobs and services. It includes a commitment to deliver more social and mid-market rent homes, strengthen homelessness prevention and ensure that 35% of new housing is affordable. It also supports 20-minute neighbourhoods and better transport connections to help people live closer to where they work. 

Reinvesting in the city

Edinburgh’s thriving tourism industry is another area where the city is working to spread the benefits of growth more fairly.

The Edinburgh Fringe, the world’s largest performance art festival, draws millions of visitors to the city every year. It creates jobs, drives spending and brings global attention to the city. But despite the significant economic activity it generates, much of the financial benefits are channelled through national tax systems. Residents, meanwhile, experience the disruption of peak season without seeing tangible improvements to local services and infrastructure.

A new visitor levy is set to change that. From 24 July 2026, visitors will pay a 5% charge per night on paid accommodation. The levy will apply across the whole Local Authority area, 365 nights per year and is projected to raise up to £50 million a year by 2028/29.

This is the first time Edinburgh will have a dedicated income stream tied directly to visitor numbers – allowing the Council to reinvest in the services and infrastructure that support both residents and the visitor experience. Proposed uses include affordable housing, city maintenance, and support for the culture and wider visitor economy sector.

This initiative, along with wider action to address the city’s inequality, point to a fairer future, where the benefits of growth are felt more broadly.