The capital’s economy should gather pace next year, boosted to 2.3 per cent by an upturn in the construction and property sectors, according to a new report by analysts Oxford Economics. This would follow a “lacklustre’ 2018, which is seeing growth of an estimated 1.8 per cent.
Inner London is expected to account for 70 per cent of London’s growth next year, with Camden and Westminster leading the way thanks to “strong growth in the information and communications sector”.
The capital’s employment rate is also expected to grow, by 0.6 per cent, though not as fast as the likely 1.4 per cent in 2018 as businesses “prioritise improving their productivity”, the report says. There was a rise of 48,000 people in work in the third quarter of this year compared with the second at a time when employment levels were static in the UK as a whole.
London’s unemployment rate fell to a record level of 4.8 per cent in the third quarter of this year, as measured by the International Labour Organisation. However, all but three boroughs – Brent, Hillingdon and Waltham Forest – saw increases in their claimant counts in October compared with the same month last year. Barking & Dagenham saw its rate increase for the sixth month in row.
Richard Holt, head of global cities research at Oxford Economics, says that although business confidence in London is currently “very weak”, due to uncertainty over Brexit and the broader political situation, the capital’s economy is still expected to “grow a little faster in 2019 then in 2018 and faster still in subsequent years”.
The organisation’s view is that “while Brexit may be a restraint on growth in the capital, there are other positive factors that will outweigh it”, Holt writes, adding that “the immediate exodus of very large numbers of finance jobs” that some predicted has “proved an exaggeration”.
However, he acknowledges a risk that “the EU will use regulatory requirements to gradually squeeze the competitiveness of London as a financial centre” and the perhaps more significant problem of the UK’s post-Brexit migration regime creating labour shortages in the capital.”