By Grant Smith and Stefan Morkis

Dundee’s council leader said yesterday she was “very optimistic” about the future of the city, but its business leader warned future success might bring problems.

Councillor Jill Shimi and Mr Mervyn Rolfe were reacting to a study that said Dundee’s population decline was tapering off and job prospects for its well-educated workforce were improving.

Experts at the European institute for urban affairs at Liverpool John Moores University compared the six Scottish cities with cities in England and across the Continent.

Although Dundee had suffered a significant loss in population, the rate at which people were leaving was dropping, with a decline of less than 1% in 2002/03.

The number of people with jobs rose by 5.4% between 1996 and 2003, compared to a national average of 3.2%. Unemployment fell by 6.2% over the same period, compared to 2.9%.

Graduates make up almost 30% of the city’s workers, beating most English and some European cities, and Dundee also does fairly well on research and development spending.

Wage levels have improved substantially, although the report acknowledged significant problems remain with deprivation and reliance on state benefits.

Councillor Shimi welcomed the Competitive Cities report, saying, “I am delighted to read such a positive study of Dundee’s economy, especially coming from an independent source taking a wide-ranging European perspective of the city.

“The city council, working together with its partners in the private, public and academic sectors, has helped turn around the local economy from a position of decline to one of sustained growth where there are historic low levels of unemployment and record numbers in jobs.

“The city council has made economic growth a key long-term target and we have achieved this by investment in the Dundee Partnership and local initiatives focusing on the city’s skills in biotechnology and digital media.

“But we are under no illusions that there is still some way to go to ensure that even more people in Dundee can share in the many successes of our local economy and take advantage of the many opportunities that are being created.”

“Dundee City Council is very optimistic about the future of this city,” she added.

Dundee and Tayside Chamber of Commerce and Industry chief executive Mr Rolfe also welcomed the report, but warned businesses the success could bring new problems.

“I’m not surprised by any of the findings,” he said. “One that continues to give the business community some concern is the lower level of economic activity in Dundee but all the indicators seems to say that we are going in the right direction.

“I am particularly pleased that the level of research and development is increasing.” But he cautioned, “As we move closer to full employment, wages will rise and it could make it difficult for some sectors to find employees.

“We are beginning to see a skills shortage in some areas and that, in particular, needs to be addressed.”