The Edinburgh Festival Fringe is worth about £1bn to Scotland — three times greater than had been thought — according to a fresh economic analysis of the world’s biggest arts festival.

 

The London-based Centre for Economics and Business Research (CEBR) calculates that the annual event, which attracts tens of thousands of people to the Scottish capital, generates £500m in direct spend.

 

The injection of extra income fuels a “multiplier effect”, involving more spending and more income, that pumps a further £560m into Edinburgh’s economy and beyond.

 

The last official estimate of the economic impact of the Edinburgh festival in 2015 suggested that it contributed £312m to Scottish gross domestic product. It assumed that the average visitor, performer or supporter who attended the festival spent £195 additionally in Edinburgh.

 

“It is likely that the Edinburgh festival generates about £500m in additional direct expenditure in Edinburgh. CEBR has probably done more work on the multiplier effects of spending on the arts in the UK than any other economics team and our estimates suggest that such spending has larger multiplier effects than most types of spending. We think that the indirect impacts of the festival spending are an additional £560m.”

 

McWilliams said the Fringe was an example of an emerging micro-economy in Scotland, as the nation’s economy moved away from oil and finance towards tourism, arts and whisky (more than a fifth of all the UK’s food and drink exports).

 

He points to data showing that Scotland has raised £941m less in income tax revenue than had been expected in 2017-18, despite higher earners paying more than those south of the border — someone earning £50,000 a year pays £1,500 more in income tax in Scotland than in England.

 

“A factor that has not been discussed in this context is the structural shift in the Scottish economy, from tax-rich sectors such as finance and oil to sectors that are more labour-intensive but generate less tax per unit of gross value added, such as tourism and the arts,” said McWilliams.

 

“With growth slowing but unemployment remaining even lower in Scotland than in the rest of the UK, perhaps the government needs to rethink its tax strategy to make Scotland more attractive to incoming employees. When the EU puts constraints on Ireland’s ability to cut taxes, there is an opportunity for post-Brexit Scotland to reinvent itself as a low-tax haven to attract companies and employees.”

 

Official data shows that the Edinburgh festival supports 2,842 jobs in the capital each year — and a further 3,400 across the country — with admissions up by about 45% since 2010, and by nearly a quarter in the last three years alone, to a record 2.83m.

 

More than 59,600 performances of 3,841 shows will be staged across 323 venues this month, suggesting that the Fringe has grown by about 20% in five years.

 

In 2014, there were just under 49,500 performances of 3,193 shows in 299 venues. The rate of growth, however, has raised concern over the capital’s ability to cope in years to come.

 

View the full article here.