London’s slowdown is the root cause of Britain’s low productivity, with the capital lagging behind other countries and similar global cities over the past 15 years, according to a study released Thursday. is shown.
In the report, the Center for Urban Think Tanks found that the value of output per hour was London It has lagged behind Paris, New York and Brussels since 2007, arguing that greater devolution by the central government could ease post-Brexit and post-coronavirus challenges that have affected output.
London’s weight in the nation economic If Britain’s productivity had grown in line with Paris, New York, Brussels and Stockholm since the 2008-2009 financial crisis, the UK’s gross domestic product would be £54bn higher in 2019, according to a think tank. That’s it. It added that tax revenue would be £17bn higher.
Instead, an analysis of official data shows that the capital’s annual growth rate of productivity (defined as the value of output per hour) has averaged just 0.2% since 2007, compared to the already low national average of 0.3%. was slightly below the %.
Productivity growth over the same period averaged 0.9% in Paris compared to 1% in the United States, nearly double the French average and 1.4% in New York.
Such underperformance is problematic because London’s economy, based on ‘superstar’ companies in the professional services, IT and banking sectors, remains much more productive than other regions. Employment is also growing rapidly in the capital, which means that it will increasingly drive national trends.
Both the government led by Prime Minister Rishi Sunak and the Labor Party led by Sir Kiel Sturmer see productivity gains as essential to reviving the economy’s fortunes. In the long run, higher wages and higher living standards require higher productivity, and inflation will not accelerate.
The main reason for London’s economic slowdown, according to the report, is that the most productive firms in the heart of the capital have performed poorly, while the emerging regions on its periphery have experienced the fastest productivity gains. That’s it.
The Center for Cities said this sharp slowdown predates Brexit and cannot be explained by macroeconomic trends such as prolonged ultra-accommodative monetary policy.
Instead, it suggests that the rise may be the result of rising commercial real estate costs that crowd out more productive intangible investments. He added that high housing costs and a weaker sterling have made London less attractive to highly skilled professionals from abroad.
Center for Cities policy director Paul Sweeney said London’s selling point was to “offer benefits that exceed costs” and that “if those benefits are eroding and costs are rising, London will become less attractive,” he said.
He added that subpar productivity could exacerbate Brexit and domestic work problems and lead to further declines if this trend continues.
Think tanks could lower the cost of housing and office space through reforms, while new fiscal powers could allow mayors to impose payroll taxes or introduce city sales and tourism taxes. said to be sexual.
It added that a priority for other ministers should be to spur highly skilled immigration and seek better deals with the EU for trade in financial services.
Britain’s Treasury said the prime minister had laid out a plan to boost productivity and the government had also launched an “ambitious” financial services reform.
