LONDON - Economy

Responses of London to historic changes

The Industrial Revolution shifted production into factories in the East End and outer suburbs. As the shipping industry developed, London became a centre for international commodity trade. This prompted further Inner London specialisation in banking, foreign exchanges and insurance, which were already well established by the 18 th Century.

Following the post Second World War reconstruction, manufacturing declined in the 1960s. The de-industrialisation which took place was symbolised by the abandonment of the Docklands region of East London in the late 1960s and 70s. Regeneration programmes helped redevelop the area into new office complexes and luxury housing, including the CanaryWharfTower, highlighting the rising dominance of the financial services sector.

Deregulation of the financial services industry in 1986 (dubbed the ‘Big Bang’) helped London exploit the full potential of its historic specialisation in banking and exchange. The 1990s witnessed an expansion in business services activity and more recently there has been a rapid growth in creative industries such as advertising and the information industry.

A highly successful economy

The Gross Value Added (GVA) per head of the region was estimated to be more than 50% higher than the United Kingdom average in 2001. London ’s entire workforce (including commuters) generated an output representing 19% of the UK ’s total output. However, though London ’s economy has grown faster than the rest of the UK over the last decade, it has also been more volatile with more pronounced peaks and troughs.

Non-industrial sectors generate over 85% of London ’s output, compared to just over 75% in the UK. The largest sector is Real Estate, renting and business activities, which accounts for around 35% of the capital’s output. Finance generates 11.2% of the capital’s output. The public sector is a smaller part of the economy in London compared to other parts of the UK.

Creative industries of the media, such as advertising, marketing and web design companies, are clustered around many of the recently regenerated areas of the capital. The city also acts as a magnet for architects, civil engineers, and designers who help to combine aspects of the established manufacturing trades with a more radical attitude from an artistic perspective. For example, the designs of Canary Wharf Underground station and the Millennium Wheel.

The share of GVA represented by the Agriculture, forestry and mining industries in 2000 was insignificant. The share for manufacturing, electricity, gas and water supply, and the construction industry combined was 16.2%; compared to the UK average of 26.1% The services and financial sector thus is by far the most important, with the highest share of any region.

House prices in London rose more slowly than elsewhere during 2002 and 2003. This has been a topic of speculation within the capital, owing to the exceptional growth in house prices since the 1990s and partly fuelled by the increase in the ‘buy-to-let’ market. Concern has frequently been expressed over the lack of affordable housing for low income groups and the knock-on effects this has had in creating difficulties for the recruitment of staff to key public services. The increased demand for housing can be taken as a sign of the remaining buoyancy of London ’s’ economy and its attractiveness as a place to live and work.

Transport remains a crucial issue for planners. In 2003 London's Mayor introduced 'Congestion Charging' for vehicles entering the centre of London between 7am and 6:30pm, which appears to have cut traffic levels.

Most of London's trade is with the rest of the United Kingdom

The London region has a mutually beneficial relation with the rest of the United Kingdom: it shares its wealth via trade and public finances. It also acts as a gateway between the regions and the world.

On balance, London exports are essentially based on financial and business services while it imports manufactured goods in particular.

London plays a crucial role in the economic wellbeing of the United Kingdom, supporting the economies of neighbouring regions. London itself also acts as a magnet for tourists and is usually cited as the main attraction for people visiting the United Kingdom.

Transport

In 2002, motorways in the region had a vehicle flow of just over 100,000 vehicles per km per day, compared to fewer than 80,000 for the rest of England. In the year prior to this, there were nearly than 2.5 million vehicles registered in the region, or 10% of all the vehicles registered in Great Britain. However a greater proportion of London households than the British average have no cars or vans. Car ownership seems less essential compared to the rest of the country, owing to the widespread availability of public transport.

London’s’ Public Transport includes the Underground rail network, which serves much of the city and facilitated the growth of suburban commuter belts. London buses are coloured a distinctive red. Both are established as icons of the city and their operation plays a crucial role in the ability of London to function. National rail services also serve the city from several stations radiating out across Britain.