A nowcast for London for the 12 months ended March 2021 which incorporates the second lockdown, published by the Economic Statistic Centre of Excellence (‘ESCoE’) on a rolling 4 quarter basis, has estimated that the capital’s economy contracted by 13.1%.
This ranked the city eleventh in the UK (previous ranking twelfth). Over the same period the East Midlands was ‘best’ with a fall of 9.4%, with Wales’s 13.4% contraction the ‘worst’. The UK overall posted -11.8% on the same measure.
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. This is the last nowcast that will be published by ESCoE with the ONS taking over the running of the model in the future.
ONS GDP to December 2020
Official ONS figures for an earlier period which reflect a mix of continued recovery from the first lockdown but also a slowdown from the second lockdown show the city’s performance relative to other parts of the UK.
The ONS’s figures for the quarter to December 2020 showed London post growth of 3.1% compared with 13.3% to September 2020.
This placed London top (previous ranking bottom) out of the twelve UK ‘regions’ with the East Midlands last, posting growth of -0.8%. UK growth was 1%.
In this period, London’s best sector was information services at 8.6% whilst accommodation fell by 15. Overall Production, Construction and Services were 0.4%, 3.4% and 3.1%.
Data from the ONS showed the Job Retention Scheme continued to mitigate unemployment across the UK. Unemployment in the city fell by 38,000 to 330,000 between March and May 2021; the drop of 0.7% took the rate to 6.5%. At 6.5% London was the highest; Northern Ireland had the lowest rate of 3.6%, with the UK rate at 4.8%.
The South East had the highest employment rate at 77.7%, this compared with 70.3% in Northern Ireland and 74.5% in the capital where 3.1m are employed; the UK rate was 74.7%.
Public sector employment in London increased by 4.3% to 780,000 in the year to March 2021, which was 14.8% of the workforce and the lowest in the UK. At 25.9% Northern Ireland had the highest level of public sector employment.
ONS figures also showed that in 2020, output per hour worked grew by 2.7% in London which ranked the city third out of the 12 UK ‘regions’. Productivity growth in 2019 was best in the North West, increasing by 4.6% and fell the most in the West Midlands, decreasing by 1.4%. Output per hour worked in the UK overall increased by 0.4%.
Research and Development
The city attracted £6.4bn of R&D spend in 2019, up from £6bn in 2018. This ranked London third in the UK (previous ranking third). Over the same period the South East did best and secured £7.5bn of R&D expenditure with the North East only attracting £0.7bn.
Overall UK R&D spend rose by £1.3bn (3.4%) to £38.5bn in 2019 – the lowest percentage growth since 2013. Most R&D expenditure was in the business sector at £25.9bn (67% of the UK total), followed by the higher education sector at £9.1bn (24%).
Total R&D expenditure represented 1.74% of GDP in 2019; compared with 1.59% in 2008 and 1.72% in 2018. Overseas funding of R&D increased by 4.1% to £5.6bn in 2019 compared with 2018; this was 0.8% higher than the peak in 2014 of £5.5bn.
The city’s average property price fell by 0.7% in May to £497,948. The drop took the annual increase to 5.2%. In comparison, UK prices grew by 0.9% to £254,624, an annual growth rate of 10%.