With the government reportedly needing to fill a financial hole of “at least £50 billion” with tax hikes and spending cuts amid concerns that the UK economy is growing more slowly than forecast, the country’s dependence on London’s services economy has been underlined by the latest overview from City Hall economists.
The October edition of London’s Economy Today includes Office for National Statistics (ONS) figures showing that in 2020 exports by London’s services sector, which includes financial transactions and consultant expertise, bucked the national trend by increasing compared with the previous year. It almost made up for a fall in the export of goods from London, as in the rest of the UK, during the first year of Covid-19.
The overview reports ONS analysis showing that “restrictions on movement during the pandemic have contributed to a fall in both goods and services exports at the UK level in 2020”. Total UK exports fell by £75 billion to £572 billion during that period, with a drop in services exports accounting for £15 billion of the reduction.
But in London exports fell by just £3 billion as a whole to £180 billion, with a drop in goods exports of £12 billion offset by a rise of £8 billion in services exports. Within the overall London export total, “the capital benefited from a £15 billion increase in finance exports, of which £10 billion came from Inner West London, where the City of London is located”, the overview says.
The overview also confirms that by the final quarter of 2021 London’s economic output had grown 3.2% bigger than it was during the same period of 2019, before Covid struck, while that of the UK by a different but comparable measure was 0.1% less.
An interim update of City Hall’s labour market projections for the capital based on historic trends finds that employment in London will rise from six million jobs in 2021 to 6.6 million in 2031, 6.8 million in 2041 and 6.9 million in 2051, led by continuing fast growth in professional services, albeit slightly less fast than in the past decade.
The growth in jobs to 2041 will be greater in inner London than outer London, ranging from less than 10% in Lewisham, Westminster and Kensington & Chelsea to over 30% in Hackney, Hammersmith & Fulham and Tower Hamlets and over 60% in Newham, according to the projections.
“The City of London and the boroughs to its south and east – Hackney, Tower Hamlets, Newham, Greenwich and Southwark – together account for over half (427,000) of the 842,000 new jobs projected in the period,” the overview says, adding that those areas, along with Wandsworth and Hammersmith & Fulham, “all have significant identified employment site capacity”.
Waltham Forest, Croydon, Havering, Brent, Barking & Dagenham and Haringey are estimated to see employment growth of more than 10%, while Sutton, Kingston and Bromley will see less than 5% growth.
The overview, produced by the GLA Economics department, is HERE.
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