London’s Role in the UK Economy – and the Future Challenges it Faces Tony Travers London School of Economics & Political Science

Decentralisation after 1945 Pre-war Barlow Committee suggested that the UK economy needed to be ‘decentralised’; WW2 intensified debate about over-centralisation Certificates required to open factories in London and SE from 1950s to 1970s Location of Office Bureau moved office jobs from central London Also planning policies to disperse population and provide better homes in new towns and beyond Policy intended to spread economic success actually damaged London economy Population dropped by two million, projected to go to under six million Though wider South East (and outer London) continued to grow

London’s decline, 1945 to 1985 London’s population declined from 8.6m to 6.6m between 1945 and 1985 Expansion of wider metropolitan economy within South East Location of Offices Bureau set up in 1963: permits required to develop offices in central London 170,000 to 200,000 jobs relocated (mostly to surrounding areas) Office rentals rose sharply in central London Employment and older industries, eg Docks, declined fast Impact on inner London in particular

Relative decline of urban England 1931 to 2001 Source: Centre for Cities Cities Outlook 1901

London’s share of UK GDP, 2016

London’s economy today London’s share of GVA by industry

Changing growth sectors

London survived the recession - GVA growth, 2010 to 2015 Source: ONS

GVA per head, by nation/region, UK - 2015 Source: ONS

GDHI per head, by nation/region, UK - 2015 Source: ONS

% difference between median income in each region/nation of Great Britain and overall median income, 2013–14 to 2015–16 - allowing for housing costs Source: IFS

90:10 ratio, 1974 to 2014, GB nations/regions - NB: ‘90:10 ratio’ compares incomes at the 10th percentile with those in the 90th percentile Source: IFS

Net fiscal balance, by nation/region, 2016

% difference between median income in each region/nation of GB and overall median income - 1972 to 1976 compared with 2013–14 to 2015– 16 Source: IFS

London’s regional economy: the Greater South East Source: Sir Peter Hall, Is the Greater South East a Mega-City Region? IPPR, 2004

London’s regional economy: - comparison with Paris and New York GDP (£bn) London (Greater South East) 695 New York (17-County NY/NJ metro) 885 Paris (Ile de France) 500 Sources: Office for National Statistics; US Department of Commerce, Bureau of Economic Analysis, GDP by metropolitan area, Table 1; INSEE, Produits interieurs bruts regionaux et valeurs ajoutees regionales de 1990 a 2012

London and Brexit - net ‘leave’ vote, by nation and region

Jobs in London by SIC and place of birth - if migration fell substantially, what impact? Source: Greater London Authority

Labour Market Statistics - 15 November 2017

What can be learned from London’s recent success? Economic circumstances may depend on changing global factors And, now, Brexit London is both internationally and nationally focussed Immigration is crucial for image, economic dynamism and also investment Planning for economic development requires flexible governance responses to change and far better infrastructure Transport, housing, schools, health facilities, electricity, telecoms etc

Conclusions London has redeveloped itself since the 1980s as a dynamic and fast-evolving city Its economy is not over-concentrated in particular sectors and attracts international investment Language, time zone, stable government, legal systems and tolerance are elements in its image and success Capable of retaining tradition and allowing the new to develop….

London’s Role in the UK Economy – and the Future Challenges it Faces Tony Travers London School of Economics & Political Science