At -2.2% the capital’s economy shrinks faster than most other regions following lockdown but pre-pandemic data shows earlier growth of 5%

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A quarterly nowcast for London for the 3 months ended March 2020 which captures the start of lockdown, published by the Economic Statistic Centre of Excellence (‘ESCoE’), has estimated that the London economy contracted by 2.2%. ESCoE is a partnership of research institutions and the Office for National Statistics (‘ONS’).

This ranked London ninth and suggests the capital’s economy has so far coped poorly with the pandemic relative to the other eleven ‘regions’ of the UK. Over the same period the East Midlands was ‘best’ with a fall of 1% with Northern Ireland’s 3.9% contraction the ‘worst’; the UK decline was 2%.

For the 12 months ended March 2020 on a rolling 4 quarter basis, ESCoE has estimated that the capital’s growth has dropped from 3.3% to 1.8%.

This ranked London first (previous ranking also top) and suggests the city has held its position relative to the other eleven parts of the UK. Over the same period UK growth was 0.5%; growth in the East of England (ranked second) was 1.4%; and growth in the East Midlands (ranked twelfth) was -0.6%.

ONS GDP to September 2019

Official ONS figures for an earlier period which reflects Brexit uncertainty rather than Covid 19 turmoil show the capital staying top relative to other parts of the UK. Following its first publication of quarterly GDP estimates for the regions in September 2019, the ONS has now published its fourth estimate for London, the other eight English regions, and Wales.  GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013.

These stats are for the period six months before ESCoE’s estimates shown above and compare GDP in the quarter ended September 2019 with the same quarter a year earlier. These showed London grew by 5%, a deterioration of 0.3% on the previous quarter. This placed London top (previous ranking also first) out of the twelve UK ‘regions’.

London’s growth of 5% compared with UK growth over the same period at 1.2%. The West Midlands was the worst performer and contracted by 1.5%. The East of England and the North West were the other two ‘regions’ in the UK to suffer a decline.

In the same report, the ONS’s figures also highlighted that the standalone quarter to September 2019 showed an improving picture in London with the data better than the previous quarter. London’s economy grew by 1.4% in July to September 2019, following growth of 1.2% in April to June 2019.

This placed London first (previous ranking also top) out of the twelve UK ‘regions. Four regions of the UK saw their economies contract but overall the UK grew by 0.5%.

The North East of England was second with quarterly growth of 1.3% whilst the North West and Northern Ireland contracted by 0.2%, with the East Midlands posting a drop of 0.3%.

In this period, London’s best sector was education with growth of 8% but mining fell by 16.7%. Overall production grew by 3.3%, services by 1.5% and agriculture by 2.5% but construction fell by 1%.

Labour

More largely pre-pandemic data from the ONS showed unemployment in the capital was 27,000 higher at 239,000 between January and March; the uplift of 0.4% took the rate to 4.7%. At 5.4% the North East was the highest; Northern Ireland had the lowest rate of 2.4%, with the UK rate at 3.9%.

The South East had the highest employment rate at 80.2% which compared with 76.9% in London where 4.9m were employed; the UK rate was 76.6%.

Housing

The capital’s average property price increased by 1.2% over the month to £485,794. The uplift took the annual increase to 4.7%, the highest in the UK. In comparison, UK prices dropped by 0.2% to £231,855 during March, an annual growth rate of 2.1%.

The ONS data is based on completed housing transactions. Typically, a house purchase can take 6 to 8 weeks to reach completion so the price data in the March figures will therefore reflect those completions that occurred before lockdown.

Given the closure of the housing market following lockdown the ONS has suspended its index until further notice.

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