A nowcast for London for the 12 months ended December 2020, published by the Economic Statistic Centre of Excellence (‘ESCoE’), has estimated that the capital’s economy contracted by 12.9%. This ranked London bottom in the UK. Over the same period the East Midlands was ‘best’ with a fall of 8.9%.
ESCoE also gave estimates of regional growth over a longer period. Over the last five years, London, the East of England and the West Midlands have grown relative to the other parts of the UK despite experiencing some of the largest declines in activity in 2020.
At the bottom of the table, the North East of England is an outlier in terms of weak economic performance and the devolved administrations have also posted below average results.
ESCoE is a partnership of research institutions and the Office for National Statistics (‘ONS’) and has highlighted that during these unprecedented times, with differing lockdowns, there is no historical data that their model can use to fully understand how the pandemic will impact regional economies. Consequently the partnership emphasises the uncertainties that exist with their nowcast at this time.
ONS GDP to June 2020
Official ONS figures for an earlier period which reflects the full effect of the first lockdown show the capital’s performance relative to other parts of the UK.
These stats are for the period six months before ESCoE’s estimates shown above and compare GDP in the quarter ended June 2020 with the same quarter a year earlier. These showed that London’s growth was -16.3% compared with +1.5% the previous quarter. This placed London top (previous ranking also top) out of the twelve UK ‘regions’.
UK growth over the same period was -20.7%. The West Midlands was bottom, posting growth of -24.7%.
In the same report, the ONS’s figures for the standalone quarter to June 2020 showed London post growth of -16.6% compared with -1.5% in January to March 2020.
This placed London third (previous ranking first) out of the twelve UK ‘regions’. Northern Ireland was top with quarterly growth of -13.6% whilst the West Midlands was bottom, posting growth of -21%.
In this period, London’s best sector was real estate at -1.4% whilst accommodation fell by -77%. Production, Construction and Services were -15.5%, -45.5% and -15.4%.
Data from the ONS showed the Job Retention Scheme continued to mitigate unemployment across the UK. Unemployment in the capital was 55,000 higher at 356,000 between October and December; the uplift of 1% took the rate to 7%. At 7% London was the highest; Northern Ireland had the lowest rate of 3.6%, with the UK rate at 5.1%.
The South East had the highest employment rate at 78.6%, this compared with 69.4% in Northern Ireland and 74.7% in London where 4.6m are employed; the UK rate was 75%.
Public sector employment in London increased by 3.6% to 762,000, which was 14.3% of the workforce. At 25.3% Northern Ireland had the highest level of public sector employment, London was the lowest.
In December, London had the highest average earnings of £862 and the lowest average earnings of £555 were recorded in North East.
Earnings in Wales increased the most in the UK by £44 per week whereas the biggest drop in wages was £27 in Yorkshire and the Humber. The rate of annual pay growth was 4.7% for total pay and 4.1% for regular pay. In real terms, total pay is growing at a faster rate than inflation at 3.8%, with regular pay growth at 3.3%.
The finance and business services sector saw the highest estimated growth in total pay, at 6.8%. All sectors saw positive growth, although construction (1.9%) and manufacturing (1.5%) had smaller growth than the other sectors. This is an improvement on the growth rates in April to June 2020, the three-month period with the biggest falls in average pay, when all these sectors except for the public sector had negative growth rates. Public sector pay growth is now 4.3%.
London’s average property price fell by 1.1% in December 2020 to £496,066. The drop took the annual increase to 3.5%. In comparison, UK prices grew by 1.2% to £251,500 during September, an annual growth rate of 8.5%.