Economy of London

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Regional Profile of London

London is the world's leading financial centre for international business and commerce and is one of the "command centres" for the global economy.[1][2][3]

According to Brookings Institution, London has the fifth largest city economy in the world, after Tokyo, New York City, Los Angeles and Seoul with an estimated GVA of £309.3 billion ($546.4 billion) in 2012, and a per capita GVA of £37,232 ($65,768).[4] By way of comparison, London's economy is roughly the same size as that of Sweden or Iran.[5]

With an estimated 8,308,369 residents in 2012, London is the most populous region, urban zone and metropolitan area in the United Kingdom.[6] London generates approximately 22 per cent of the UK's GDP.[4] 841,000 private sector businesses were based in London at the start of 2013, more than in any other region or country in the UK. 18 per cent are in the professional, scientific and technical activities sector while 15 per cent are in the construction sector. Many of these are small and medium sized enterprises.[7]

Although London is home to numerous companies within the United Kingdom, government statistics show how important it is to other nations. For example, the most recent data estimates that London exports approximately £92billion worth of products every year while its GDP is greater than the economies of Belgium and Switzerland.[8]

Service industries[edit]

London shifted to a mostly service-based economy earlier than other European cities, particularly following the Second World War. London's success as a service industry and business centre can be attributed to the aggregate effect of several specific factors:

  • English being the native language and the dominant international language of business
  • its former position as the capital of the British Empire
  • its location within the European Union, which has a population and GDP larger than the US
  • the special relationship between the United Kingdom and United States and the United Kingdom's close relationships with many countries in Asia, Africa and the Middle East, particularly those in the Commonwealth of Nations
  • its location in a central time zone that allows it to act as a bridge between US and Asian markets
  • English contract law being the most important and most used contract law in international business[9]
  • relatively low taxes, particularly for foreigners - non-UK domiciled residents do not get taxed on their foreign earnings
  • a business friendly environment (e.g. in the City of London the local government is not elected by the resident population but instead by business - the City of London is a business democracy)
  • good transport infrastructure particularly its aviation industry
  • a high quality of life for the average resident

Currently, over 85% (3.2 million) of the employed population of greater London works in the service industries. Another half a million employees resident in Greater London work in manufacturing and construction, almost equally divided between both.[citation needed]

Business districts[edit]

London has five major business districts: the City, Westminster, Canary Wharf, Camden & Islington and Lambeth & Southwark. One way to get an idea of their relative importance is to look at relative amounts of office space: Greater London had 26,721,000 m2 of office space in 2001.

Business District Office Space (m2) Business Concentration
The City 7,740,000 finance, broking, insurance, legal, fund managers
Westminster 5,780,000 head offices, real estate, private banking, hedge funds, government
Camden & Islington 2,294,000 creative industries, finance, design, art, fashion, architecture
Canary Wharf 2,120,000 banking, media, legal
Lambeth & Southwark 1,780,000 accountancy, consultancy, local government
Waterside, the headquarters of British Airways in the Borough of Hillingdon

A useful guide to the distribution of wealth across London is the cost of renting office space. Mayfair and St. James's are historically and currently the most expensive areas - approximately £80.00 per sq ft per annum. The least expensive commercial districts are Waterloo & Southwark and East London Tech City, a new, but growing hub of start up technology companies, also known as Silicon Roundabout - approximately £33.00 per sq ft per annum [10]

Domestic and international corporate headquarters[edit]

More than half of the London Stock Exchange top 100 listed companies (the FTSE 100) and over 100 of Europe's 500 largest companies are headquartered in central London. Over 70% of the FTSE 100 are located within London's metropolitan area, and 75% of Fortune 500 companies have offices in London.

Financial services[edit]

London's largest industry remains finance, and its financial exports make it a large contributor to the UK's balance of payments.[11] The city is home to exchanges, banks, brokers, asset managers, pension funds, hedge funds, private equity firms, insurance companies and reinsurance markets.

A second financial district has developed at Canary Wharf to the east of the City, which includes the global headquarters of two of the world's largest banks, HSBC and Barclays, the rest-of-the-world headquarters of Citigroup and the headquarters of the global news service Reuters. London handled 36.7% of global currency transactions in 2009 — an average daily turnover of US$1.85 trillion — with more US dollars traded in London than New York, and more Euros traded than in every other city in Europe combined.[12][13][14]

BT Centre, the headquarters of BT Group, in the City of London

Professional services[edit]

Many professional services firms are located in London including the big four accountants and major management consulting firms. London is the headquarters for four of the world's six largest law firms.[15]

Media[edit]

Media companies are concentrated in London (see Media in London) and the media distribution industry is London's second most competitive sector.[16] The BBC is a key employer, other broadcasters also have headquarters around the city. Many national newspapers are edited in London, having traditionally been associated with Fleet Street in the City, they are now dispersed across the capital. Soho is the centre of London's post-production industry.

Tourism[edit]

Tourism is one of London's prime industries, and London is, by a considerable margin, the most visited city in the world by international tourists, with 15.6 million international visitors in 2006, ahead of second placed Bangkok (10.4 million international visitors) and third placed Paris (9.7 million).[17] Tourism employed the equivalent of 350,000 full-time workers in London in 2003,[18] whilst annual expenditure by tourists is around £15bn.[19]

Technology[edit]

A growing number of technology companies are based in London, notably in East London Tech City also known as Silicon Roundabout.

Retail[edit]

London is a major retail centre and in 2010 had the highest non-food retail sales of any city in the world, with a total spend of around £64.2 billion.[20]

Manufacturing and construction[edit]

Tate & Lyle sugar refinery, Silvertown

For the 19th and much of the 20th centuries London was a major manufacturing centre (see Manufacturing in London), with over 1.5 million industrial workers in 1960. Manufacturing suffered dramatic decline from the 1960s on.[21] Entire industries have been lost including shipbuilding (which ended in 1912 after hundreds of years with the closure of the Thames Ironworks and Shipbuilding Company), consumer electronics, aircraft manufacture and most of the vehicle construction industry. This trend continues, with the loss of the pharmaceutical manufacturing sites of Aesica (formerly Merck Sharp and Dohme) at Ponders End in 2011 [22][23] and Sanofi-Aventis (originally May & Baker) at Dagenham by 2013.[24]

Manufacturing[edit]

Today one of the last substantial industrial plants remaining is Ford Dagenham, the largest diesel engine manufacturing site in the world.[25] Food and drink manufacture remain in places, for example baking at Warburtons in Brimsdown, biscuits at United Biscuits in Harlesden, brewing at Fuller's Brewery in Chiswick, manufacture of coffee and chocolate by Nestlé in Hayes, and refining of sugar and syrup by Tate & Lyle in Silvertown. At 2.8%, London was the region containing the lowest proportion of employees engaged in UK manufacturing.

Construction[edit]

Office development in London is at a four-year high in 2013 with 9.7 million sq ft across 71 schemes under construction.[26]

A multi-billion pound 10-year construction programme has begun in Nine Elms on the South Bank of the river Thames in central London. This will develop the area from a semi-derelict, light industrial zone into a modern residential and business district. The programme includes regeneration of Battersea Power Station, construction of new embassies for the United States and the Netherlands, and regeneration of New Covent Garden Market which is the largest fresh produce market in the U.K.. Transport improvement plans include two new Northern line tube stations, riverbus piers, new bus services and a network of cycle lanes and footpaths. A new bridge across the river Thames will link Nine Elms to Pimlico on the opposite bank. Around 25,000 permanent jobs will be created once the new buildings are occupied and around 16,000 new homes.[27][28][29]

Other large construction projects include Kings Cross Central and Paddington Waterside.

Transport[edit]

London has an integrated public transport system operated by Transport for London under a single electronic ticketing system, Oyster card. The city’s network successfully provided transport for the 2012 Summer Olympics.[30][31] It includes the London Underground, London Overground, Docklands Light Railway, London Buses and London River Services. A ring of 18 railway stations provides train links to cities, towns and villages around the country as well Paris and Brussels via the high-speed Eurostar. The Thameslink rail network is undergoing a £6bn programme to upgrade and expand the line.

Crossrail[edit]

Crossrail, due to open in 2018, will be a new railway line running east to west through London and into the surrounding countryside. It will run on 118 km (73 mi) of track with a branch to Heathrow Airport.[32] The main feature of the project is construction of 42 km (26 mi) of new tunnels connecting stations in central London including a branch to Canary Wharf in east London. It is Europe's biggest construction project with a £15 billion projected cost.[33][34]

Airports[edit]

London is served by six international airports which are the world's busiest city airport system by passenger traffic. These are Heathrow, Gatwick, Stansted, Luton, London City, and Southend.

Ports[edit]

Once the largest port in the world, the Port of London is today the second-largest in the United Kingdom, handling 48 million tonnes of cargo each year.[35] The port is not located in one area - it stretches along the tidal Thames, including central London, with many individual wharfs, docks, terminals and facilities built incrementally over the centuries. As with many similar historic European ports the bulk of activities has steadily moved downstream towards the open sea, as ships have grown larger and other city uses take up land closer to the city's centre. Today, much of the Port of London cargo passes through the Port of Tilbury, outside the boundary of Greater London.

London Gateway, the UK's newest container port, opened in 2013. The £1.5bn facility at Thurrock, Essex, is 20 miles (32 km) down the River Thames from London. It is expected to be able to handle 3.5 million containers a year. The development is forecast to create 27,000 jobs in London and the South East and contribute £2.4bn a year to its economy.[36]

Artist's impression of the London skyline in 2012

See also[edit]

References[edit]

  1. ^ Sassen, Saskia (2001). The Global City: New York, London, Tokyo (2nd ed.). Princeton University Press. 
  2. ^ http://www.atkearney.com/documents/10192/dfedfc4c-8a62-4162-90e5-2a3f14f0da3a
  3. ^ .http://www.longfinance.net/images/GFCI14_30Sept2013.pdf
  4. ^ a b "ONS Regional GVA 2013". Office for National Statistics. Retrieved 7 January 2014. 
  5. ^ "CIA World Factbook". CIA World Factbook. Retrieved 7 January 2014. 
  6. ^ According to the European Statistical Agency, London is the largest Larger Urban Zone which uses conurbations and areas of high population as its definition. A ranking of population within municipal boundaries places London first. However, the University of Avignon in France claims that Paris is first and London second when including the whole urban area and hinterland, that is the outlying cities as well
  7. ^ "Business Population Estimates 2013". Department for Business, Innovation & Skills. 23 October 2013. Retrieved 16 November 2013. 
  8. ^ "Facts about London". One Heddon. 19 June 2014. 
  9. ^ "English Common Law is the most widespread legal system in the world". Sweet & Maxwell. November 2008. Retrieved 16 December 2013. 
  10. ^ "Office Costs In London: Office Rental Guide", FindaLondonOffice, 15 Nov 2006. URL accessed on 30 Dec 2006.
  11. ^ "Financial Services", UK Trade & Investment, 11 May 2006. URL accessed on 3 June 2006.
  12. ^ "Research and statistics FAQ". The City of London. Retrieved 2012-02-23. 
  13. ^ "Triennial Central Bank Survey" PDF (259 KiB)
  14. ^ "Key facts", Corporation of London. URL accessed on 19 June 2006.
  15. ^ "The Global 100: Most Revenue 2009". American Lawyer. Retrieved 13 August 2010. 
  16. ^ "London's Place in the UK Economy, 2005-6" PDF (960 KiB), p19, Oxford Economic Forecasting on behalf of the Corporation of London. Published November 2005. Accessed 19 June 2006.
  17. ^ Bremner, Caroline (11 October 2007). "Top 150 city destinations: London leads the way". Euromonitor International. Retrieved 28 August 2008. 
  18. ^ "London is the HR centre of opportunity in the UK", PersonnelToday.com, 15 February 2005. URL accessed on 3 June 2006.
  19. ^ "The Importance of Tourism in London", Visit London. URL accessed on 3 June 2006.
  20. ^ Potter, Mark (17 February 2011). "London tops world cities spending league". Reuters. Retrieved 14 May 2011. 
  21. ^ "Deindustrialisation 1960 to 1980". Exploring 20th century London. Museum of London. Retrieved 22 February 2011. 
  22. ^ "Pharmaceutical plant under_threat of closure". Enfield Independent. 2010-09-02. Retrieved 7 April 2011. 
  23. ^ "Complete Plant Closure of Aesica Pharmaceuticals Enfield, UK Facility". PRWeb. 22 March 2011. Retrieved 7 April 2011. 
  24. ^ "Sanofi pulls out of Dagenham". InPharm. Retrieved 7 April 2011. 
  25. ^ "Ford Dagenham at 80". Ford Motor Company. Retrieved 1 March 2011. 
  26. ^ "London Office Crane Survey – winter 2013" (Press release). Deloitte Real Estate. 5 November 2013. Retrieved 7 November 2013. 
  27. ^ "NineElms Future". Wandsworth Council. Spring 2010. Retrieved 8 September 2013. 
  28. ^ "Nine Elms on the South Bank". Wandsworth Council. Retrieved 8 September 2013. 
  29. ^ "Nine Elms London". 
  30. ^ "2012 Olympics transport strategy hailed a success". BBC. 13 Aug 2012. Retrieved 11 Aug 2013. 
  31. ^ "The TfL Olympic Legacy: Measuring the Unmeasurable". 29 Jul 2013. Retrieved 11 Aug 2013. 
  32. ^ "Crossrail Regional Map". Crossrail Ltd. Retrieved 8 September 2013. 
  33. ^ "Crossrail's giant tunnelling machines unveiled". BBC News. 2 January 2012. 
  34. ^ Leftly, Mark (29 August 2010). "Crossrail delayed to save £1bn". The Independent on Sunday (London). 
  35. ^ "Provisional Port Statistics 2010". Department for Transport. Retrieved 5 September 2011. 
  36. ^ "London Gateway 'super-port' welcomes first vessel". BBC. 7 November 2013. Retrieved 7 November 2013. 

External links[edit]