London’s economy: exceptional in many ways

In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses key regional indicators, focusing on London:

  • London’s share of total UK gross value added (GVA) increased from 20.5% in 2008 to 22.7% (the largest for any region) in 2015.
  • The three south-eastern regional economies (London, the South East (the 2nd biggest regional economy) and the East of England (the 4th biggest)) accounted for over 46% of total GVA in 2015.
  • The 3rd biggest regional economy was the North West in 2015, whilst the 5th and 6th largest were Scotland and the South West.
  • London’s GVA per head was 172 (UK=100) in 2015, easily outstripping all other regions.
  • London’s gross disposable household income (GDHI) per head was 132 (UK=100) in 2015, outstripping all other regions.
  • London has an exceptionally large financial services sector and an exceptionally small (proportionately) manufacturing sector.
  • Public sector employment was just 14.3% of all employment in London (March 2017), the lowest for any region.
  • London’s productivity levels were the highest for any region in 2015.
  • The only regions which had net fiscal surpluses in FY2015 were London (£26.6bn), the South East (£14.9bn) and the East of England (£1.5bn).

In addition:

  • Recent economic indicators suggest growth is continuing and may be picking up.
  • On Brexit, the second reading of the European Union (Withdrawal) Bill in the House of Commons is scheduled for 7 September and 11 September, when a vote will be taken.

Ruth Lea said, “London’s economy is exceptional in many ways. Its share of UK GVA continues to expand and it has the highest share of any region; it has the highest GVA per head of any region; the highest disposable household income (GDHI) per head; its industrial structure is heavily weighted towards high productivity financial services and away from manufacturing; it has the lowest dependency on public sector employment and the highest productivity levels; and it has the largest fiscal surplus. London’s economic importance continues to grow.”