London’s economic recovery from the Covid-19 pandemic has been stronger than those of major non-European capitals, though its future is clouded by the continuing lack of a long-term funding arrangement for Transport for London and the impacts of Russia’s invasion of Ukraine, according to a new analysis.
The second quarterly Global Cities Survey, published by the London Property Alliance (LPA) in collaboration with think tank Centre for London, finds that London, along with Berlin and Paris, has been outpacing its rivals New York and Hong Kong in terms of economic output, take-up of office space and growth of employment.
During the last quarter of 2021 London’s economy is estimated to have grown by just over one per cent, in stark contrast to Hong Kong’s, which saw a sharp reduction in output of eight per cent in the same period.
The capital’s unemployment rate has decreased from 5.6 per cent to 5.2, despite the ending of the furlough scheme in September. This compares favourably with the fall in New York, a difference the report attributes to the US city’s lack of a furlough scheme.
London’s commercial property sector, seen as an important economic indicator, has seen prices for West End office space rise to levels higher than before the pandemic although the same is not the case in the City of London.
Central London’s office vacancy rate, while running at just under eight per cent, fell during the second half of last year. In Manhattan, the rate is 20 per cent. However, the capital’s “return to the office” appeared to slow during February, according to office visits data. By that measure, London is in fourth place out of the five cities surveyed.
London, along with New York, has also been seeing a slower recovery in retail visits and public transport use than Paris and Berlin.
Alexander Jan, co-author of the survey and chief economic adviser to the LPA, said London “seems to have demonstrated a smoother transition from pandemic to endemic” but stressed that the full impact of changes in travel, working and shopping habits remains unclear and the Ukraine crisis is now a complicating factor, “with falls in consumer and investor confidence likely to send some economic gains into reverse”.
Jan called for the government to provide more help by “such as agreeing a funding settlement for London’s transport network and a long overdue reform of business rates”.
Charles Begley, chief executive of the LPA, said the survey’s data “is encouraging for London” and “serves to highlight how the capital’s competitive strengths rate globally and where lessons can be learned to help further consolidate London’s critical role in the supporting the UK economy and inform policy making”.
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