The movement of senior financial sector jobs out of Edinburgh may not be as damaging to the local economy as previously suggested, an Edinburgh academic has told The Journal.

Responding to claims that the financial “centre of gravity” has shifted from Edinburgh to London, Professor Seth Armitage of the University of Edinburgh said that “there is no evidence that the financial crisis has damaged Edinburgh differentially above other places”.

The comments regarding Edinburgh's demise as a financial stronghold were made last week by former Royal Bank of Scotland (RBS) group chief economist Jeremy Peat.

Mr Peat testified to the Scottish Parliament’s Economy Committee that the loss of the corporate headquarters of key financial services institutions RBS and HBOS could damage other high-level positions in Edinburgh.

“As a result of having a head office here you have a demand for high-quality lawyers, high-quality accountants, architects,” said Mr Peat.

Prof Armitage from the finance department at the university's business school said that the situation was not as bad as was claimed.

He told The Journal that “most of the senior banking jobs, in any case, are not based in Scotland,” and that the focus of Scotland’s financial sector has never been on commercial banking, but rather on its role as “a major centre for insurance and investment management”.

Recent statistics from Scottish Enterprise suggest that Scottish investment firms manage up to £580 billion in funds, with Edinburgh identified as the sixth largest fund management centre in Europe.

Prof Armitage said that Scotland has “a real, professional basis” in this area, with large investment companies such as Standard Life, Baillie Gifford and Aegon UK all based in Edinburgh.

The banking industry employs 49,000 people in Scotland, with most of these in retail banking rather than corporate roles.

Lloyds Banking Group recently announced plans to cut a further 1,000 Scottish jobs in response to the continuing financial crisis.

This week a former chairman of RBS, Sir George Mathewson, fuelled further speculation that Edinburgh’s position in the UK banking industry could be in jeopardy.

Sir George was quoted in The Herald as saying that “I do think it will be difficult for RBS in the future, in terms of remaining in Scotland".

Prof Armitage questioned whether the loss of senior banking jobs would have “a knock-on effect on other sectors of the economy”.

“I see no reason why it should,” he said.

Asked whether the independence of the Scottish economy was likely to be affected by a move south of the border, Prof Armitage commented that “although it looks as though there’s a transfer of power from Scotland to England, I’m not sure how much of that is real and how much is illusory”.