Analysing data from 2007, prior to the onset of the economic downturn, to the latest available, a clear trend is apparent with London outperforming the rest of the UK economy.
Over this period, London’s nominal output has risen faster than other regions; its employment and unemployment rates have fared better than other regions; it has seen a larger growth in its active business stock; it has seen an increase of over 250,000 jobs whilst most other regions have seen a decline; and the average incomes of its residents have increased when compared to residents elsewhere in the UK.
London’s path through recession differed from other regions. It maintained strong output growth in 2008 when growth in other regions began to slow. It followed this with a smaller decline in output in 2009 than anywhere else. Other regions bounced back in a greater extent in 2010, but the regional data for 2011 again showed London with much stronger year-on-year growth in output than the rest of the UK.
The net effect is that from 2007 to 2011 London’s economy (GVA) grew by a nominal 12.4% compared to between 2.3% and 6.8% across other UK regions. (Note this nominal GVA statistic does not account for inflation – see notes). This led to London’s share of UK output rising from 20.7% to 21.9% over the period.
London’s labour market performance has also outperformed other parts of the UK. Between the final quarter of 2007 and the final quarter of 2012, London’s employment rate showed an improvement of 0.9 percentage points. The combined employment rate for the Rest of the UK experienced a decline of 1.7 percentage points over the same period.
London has also seen an increase in jobs. There was a 267,000 increase in workforce jobs in London between September 2007 and September 2012. All other regions except the South East and Wales experienced a decline in workforce jobs over the same period.
There is a similar story in terms of the number of active businesses. Comparing the number of active businesses in 2011 with the number in 2007, the data shows that London increased its active business stock by 11.5% over this period. With the exception of Scotland, which also witnessed a large increase, across all the other countries and regions of the UK the number of active business either decreased or increased by less than 3%.
All this has had a direct impact on the incomes of residents. The latest data (2010) showed average household income per head in London 30% above the UK average. This is up from 26% above the UK average in 2006.
In fact the only indicator not to show a clear improvement in London relative to elsewhere in the UK in recent years is its labour productivity, which fell relative to other regions/countries in 2010 and 2011. However, London’s productivity still remained 29% above the UK average in 2011, a relative level that has increased over the past decade.
Source: Office for National Statistics
This summary accompanies the article ‘Regional Economic Indicators’. The article aims to summarise the latest regional data across different economic topics. The article covers comparable data for Countries of Wales, Scotland and Northern Ireland and the nine English regions. Where the term ‘regions’ is used, it should in all cases be interpreted as ‘the countries and regions of the UK’.
Regional GVA data is only available in nominal terms. Using current methods of producing regional GVA data, it is not conceptually possible to deflate the regional GVA data to provide an accurate estimate of the real change of output in each region/country. Because inflation is not removed from the regional GVA data, the nominal regional growth figures are different to the real GVA data published at the national level, in which inflation is removed.
Unlike the regional data, UK data can be deflated to remove the impacts of inflation on nominal GVA data. UK nominal GVA growth was 6.5% between 2007 and 2011 (as shown in Figure A), but after applying the UK GVA deflator (8.9%), the change in real UK GVA over this period was -2.2%.
Regional data is produced for GVA not GDP. The difference between them is that GVA at basic prices = GDP at market prices minus taxes on products plus subsidies on products. Between 2007 and 2011, UK GDP at market prices declined by 2.4%.
The employment rate is calculated as the share of 16-64 year olds in employment.
Workforce jobs are calculated as the sum of employee jobs, self-employed jobs, HM armed forces jobs and jobs in government supported training schemes.
The number of active businesses covers all businesses included in the Inter-Departmental Business Register (IDBR). This contains information on all businesses in the United Kingdom which are VAT registered and/or operating a PAYE scheme.
Data on regional incomes of residents is Gross Disposable Household Income (GDHI) per head. GDHI represents the amount of money available within the household sector for spending or saving.
Labour productivity refers to nominal GVA per hour worked.
An infographic summarising this data is also available.
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