London's Economy Today - Issue 181 - September 2017

The overview

• Speculation of interest rate rises on the tenth anniversary of the financial crisis
• Several indicators show growth in the UK economy, but economic forecasts remain subdued
• London’s economic indicators show growth, but some business surveys show concerns

Economic indicators

• The Purchasing Managers’ Index (PMI) survey shows the monthly business trends at private sector firms. Index readings above 50.0 suggest a month-on-month increase in that variable, while readings below indicate a decrease. PMI signals a modest rise in business activity with London firms reporting a further increase in output during August (52.8).
• The PMI New Business Index for London was at 53.0 in August and signalled a modest rise in new work but the rate of growth was the slowest since February.
• London consumers are confident about the future as shown by the GfK index of consumer confidence signalling positive sentiment in London (+7) for the first time in three months in August. (A score above zero suggests positive opinions; a score below zero indicates negative sentiment.)

London’s Economy Today supplement: Transport expenditure in London

The LET supplement this month sets out the rationale for investing in transport infrastructure and presents data on the current and planned levels of transport expenditure, with an emphasis on London.

• The public sector spent £8.5 billion on transport in London during 2015-16. London received more than a quarter of the UK’s expenditure on transport, but this is reflective of the demand and need for transport in the capital. For instance, London has one of the lowest amounts of railway expenditure and road spending per ‘user’ in Great Britain; total spending is in proportion to the size of the economy; and London receives less in public expenditure as a whole than what it contributes in tax.
• Public sector spending on transport is increasingly being funded directly by London taxpayers – something not captured in the expenditure data. For example, more than half of the cost of Crossrail 1 is funded directly by London businesses and Londoners. Importantly, the share of transport expenditure borne locally is likely to increase in the future as and when more fiscal powers are devolved to London.
• Investing in London’s transport network should not be seen as being at the expense of other parts of the UK. In fact, London’s growth is beneficial to the rest of the UK through supply chain effects, remaining internationally competitive and being a net contributor to the UK’s public finances. Consequently, investing in London’s transport system should not be seen as a ‘zero-sum game’ as essentially when London grows, the rest of the UK grows.

London’s Economy Today data on the Datastore

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