A number of city institutions, including R W Forsyth department store on Princes Street, the Ritz Cinema on Rodney Street and jewellers Abbott of Greyfriars, were to disappear for good.
But it wasn’t all doom and gloom.
A fancy new cocktail bar, Charlie Parker’s, opened up on George Street, the Edinburgh Fringe was more popular than ever and the entire city went Royal Wedding daft to celebrate the marriage of Princes Charles and Diana Spencer.
In sport, there was success for Scotland at Murrayfield against Australia, while ex-Man Utd and Hibs star George Best brought his glamorous new team, the San Jose Earthquakes, to Easter Road.
We’ve had a deep dig through the archives at the Evening News to bring you 17 memories of Edinburgh in 1981.
5. High Street Fringe acts 1981
The High Street becomes pedestrian-only as Edinburgh Festival Fringe acts and street performers entertain the crowds in August 1981. Photo: Bill Stout
6. A real cliffhanger
The Cliffhanger Theatre Company and Pookie Snack'n'burger brought Rockabilly Voodoo to the Edinburgh Festival Fringe in August 1981, playing to audiences outdoors at the children's playground behind the Fringe booking office. Photo: Alan Macdonald
7. NUS demo 1981
The National Union of Students (NUS) hold a demonstration in Edinburgh to protest against the education cuts in October 1981. Photo: Alan Ledgerwood
8. Charlie Parkers
Waitress staff preparing a special sundae at Charlie Parkers Restaurant and Cocktail Bar, George Street, Edinburgh. September 1981 Photo: Hamish Campbell