London continues to be far the most economically productive part of the United Kingdom, with output per hour worked a massive 28.5 per cent above the UK national average, while the performances of Scotland, Wales, Northern Ireland and every other English region except the South East fall below it, according to new data from the Office for National Statistics.
However, in what might be a warning sign to the national government after it chose not to invest in any new transport infrastructure projects in the capital in last week’s Spending Review, the same figures show that London was alone in showing a fall in productivity growth during the same period, albeit a very small one.
Sir Sadiq Khan has criticised Chancellor Rachel Reeves for her treatment of London, telling the BBC she made “a colossal mistake in pitting London against the rest of the country”, describing its as “ugly” and saying her failure to fund the proposed extension of the Docklands Light Railway south of the Thames to Thamesmead will make it harder to hit Deputy Prime Minister Angela Rayner’s ambitious homebuilding targets.
The new ONS figures are for 2023, and cover the the penultimate of 14 years of Conservative-led national government, during which London was excluded from a range of government funding programmes, an approach derided by its opponents as “levelling down” the capital, which produces almost a quarter of all UK economic output and generates a fiscal surplus – tax revenues that are spent in other parts of the UK – worth tens of billion pounds a year.
London’s output per job was also far higher than anywhere else’s at 35.5 per cent above the Uk average. The ONS commentary on the new data notes that it shows London maintaining its “relative strength, a continuing trend since records began in 1998.” Even so, productivity growth in London has broadly flatlined since the global financial crisis of 2008.
The new figures show that while London’s output per hour worked shrank by 1.1 per cent compared with 2019, the final full year before the pandemic, its has risen everywhere else, particularly in the North West, by 9.9 per cent, Northern Ireland, by 7.3 per cent, and Yorkshire and the Humber, by 6.1 per cent.
This means that London’s contribution to “productivity change” has been one of minus 0.3 per cent while everywhere else’s has gone up, led by the North West’s plus 0.9 per cent.
In February, the London Growth Plan, a detailed document compiled by City Hall and the cross-party London Councils group representing all of the capital’s local authorities, set the goals of increasing London’s productivity by a rate of two per cent per year over the next decade, giving a projected £107 billion boost to the capital’s economy and generating an additional £27 billion in taxes for the Treasury.
OnLondon.co.uk provides unique coverage of the capital’s politics, development and culture with no paywall and no ads. The vast majority of its income comes from individual supporters, who pay £5 a month or £50 a year. They receive in return bespoke newsletters, bargain London event offers and much gratitude. Details HERE. Follow Dave Hill on Bluesky.
Isn’t it flawed to compare a mostly urban region like Greater London with regions like the north west or north east which include rural areas, villages and small towns which will drag down the productivity score of the region relative to mostly urbanised Greater London?
Hi Mike. It’s the method used by the Office for National Statistics, which makes its productivity calculations on a per person and a per job basis. I think the differences are a reflection of the types of job that are more prevalent in London (and the south east) rather than how built up the regions in question are, and also the close clustering of certain sectors in Central London in particular.