Mayor warns London’s economic progress threatened by no-deal Brexit
London attracts more foreign direct investment (FDI) projects than Dublin, Paris, Frankfurt and New York
More than 200,000 jobs added over two years from September 2016
The Mayor of London, Sadiq Khan, has issued a stark warning that the economic progress made in the capital since he came to office could be put under threat due to Brexit.
London has fared well over the last two and a half years – with a growing economy, more jobs, higher employment and rising pay.
But Sadiq has warned that leaving the European Single Market could put our growing prosperity at risk – damaging London and the UK ‘for decades to come’, resulting in tens of thousands fewer jobs.
He also believes that even if a Customs Union arrangement is agreed as part of a Brexit deal, the UK’s national competitiveness will be permanently damaged without the UK remaining part of the Single Market.
Last year the Mayor published detailed analysis on the impact of five potential Brexit scenarios on London and the whole of the UK, commissioned from leading economic analysts Cambridge Econometrics. Among its findings, the analysis said there could be as many as 87,000 fewer jobs in London alone by 2030.
A number of key indicators underline London’s economic resilience over the last two and a half years since the beginning of the Mayor’s time in office:
- Economic output: London’s real gross value added (GVA) – the value of goods and services produced in the capital – has grown by 3.1 per cent on average between quarter two 2016 and quarter three 2018 (compared to 1.8 per cent for the rest of the UK). According to the most recent data available, London’s GVA was above £425 billion in 2017 and accounted for nearly a quarter of the UK’s total economic output.
- Jobs and employment: There were a total of 5.98 million workforce jobs in London in September 2018, up by 207,000 from 5.78 million in the second quarter of 2016. The rate of jobs growth in London (3.6 per cent) was far above that for the UK as a whole (1.6 per cent) during this period. The Office for National Statistics’ Labour Force Survey shows there were an estimated 4.76 million London residents in work in September to November 2018 – 244,000 more than April to June 2016. For the last quarter of 2018, the unemployment rate in London was 4.5 per cent – the lowest since this data set started being collected.
- Pay: in April 2018, median gross weekly earnings for full-time employees in London were £713, up 6.3 per cent from £671 in 2016 (which is higher than the UK as a whole, at 5.6 per cent).
The Mayor of London, Sadiq Khan, said: “London remains the UK’s economic powerhouse and one of the world’s most dynamic cities – and whatever happens with Britain’s departure from the European Union, that will always be the case.
“I’m proud of the progress that has been made. Over the last two and half years a number of key indicators show that the capital continues to make progress thanks to the hard work and talent of Londoners, which in turns attracts investment from both inside the UK and around the world.
“But a bad deal or no deal Brexit poses a serious threat to that progress. That’s why it’s vital that the public is given a say on the final Brexit deal, and that if we want to protect jobs and growth, any deal struck needs to include membership of the customs union and Single Market.”
The Mayor outlined his concerns while speaking at the inaugural London Business Awards, organised by his official promotional agency, London & Partners – which also compiled the economic data on the Mayor’s behalf.
Other economic indicators show that, since May 2016, London:
- attracted nearly 1,200 FDI projects – creating nearly 55,000 jobs and representing almost £20 billion in capital expenditure;
- continued to be the leading European destination for venture capital (VC) investment, with companies based in the capital attracting more than £10 billion in VC (including £5.2 billion for tech companies);
- welcomed a new record number of international visitors for a calendar year, while in 2017 19.8 million visitors spent £13.5 billion with London businesses.
Recent data also shows that for financial services, London attracted 55 inbound FDI projects in 2017 alone – more than double the number of Dublin (26), Paris (26), Frankfurt (24) and New York (20).
Notes to editors
Key economic indicators
London’s real GVA has grown by 3.1 per cent on average between the second quarter of 2016 and the third quarter of 2018. The comparable figure for the previous administration (May 2012 to May 2016) was 3 per cent. At the UK level, average real GVA growth has been 1.8 per cent and 2.2 per cent respectively during those periods.
The result of the Brexit referendum is considered to have had a negative effect on the economy since the third quarter of 2016 – mainly due to the uncertainty it has caused. The extent of this effect remains unclear, but recent available studies point to an approximate two per cent shortfall in GDP growth compared to a counterfactual with no EU Referendum.
Looking forward, GLA Economics forecasted in November 2018 that London’s GVA growth rate would be 1.9 per cent in 2018, 1.6 per cent in 2019, and 1.9 per cent in 2020.
Labour market participation
According to the ONS Labour Force Survey (LFS), there were an estimated 4.76 million London residents in work in September to November 2018 (the latest available data), 244,000 more than for April to June 2016.
The employment rate (the proportion of residents aged 16-64 in employment) in the three months to November 2018 was 74.9 per cent, up by 1.5 percentage points over this period. London’s employment rate reached its highest estimate on record (since 1992) in the three months to October 2018 (75.5 per cent) and recent estimates have been only slightly below the rate for the whole of the UK (currently 75.8 per cent – within the margin for error).
The LFS indicates there were an estimated 227,000 unemployed London residents (people not in work but seeking and available to work) in September to November 2018, down by 56,000 since April to June 2016. Over this time, the unemployment rate in London has fallen from 5.9 per cent to a record low of 4.5 per cent in the latest estimates.
There were a total of 5.98 million workforce jobs in London in September 2018, up by 207,000 from 5.78 million in the second quarter of 2016. The rate of jobs growth in London (3.6 per cent) was far above that for the UK as a whole (1.6 per cent) during this period.
In April 2018, median gross weekly earnings for full-time employees working in London were £713, up 6.3 per cent from £671 in 2016. This is higher than the rate of growth for full-time employees in the UK as a whole (5.6 per cent). At the same time, accounting for inflation, real pay in London rose by just 1.4 per cent on this measure between 2016 and 2018.