London's Economy Today - Issue 220 - December 2020

The overview

• London moves up to Tier 3 restrictions.
• UK and EU discussions on a free trade agreement continue.
• UK’s economy affected most out of the G7 economies by the COVID-19 crisis.

Economic indicators

• In November, London’s PMI business activity index decreased for the third consecutive month and sentiment turned negative. The business activity PMI index for London private firms went down from 51.4 in October to 48.2 in November, its lowest level since June. The Purchasing Managers’ Index (PMI) survey shows the monthly business trends at private sector firms. Index readings above 50 suggest a month-on-month increase in activity on average across firms, while readings below 50 indicate a decrease.
• In the three months to November, the net balance of property surveyors reporting a rise in house prices was 9, markedly down from October where this index had returned to pre-crisis levels (32).
• In November, the consumer confidence index in London registered the same level as last May (-24), a very low figure by historic standards but slightly up from the eight-year low seen in October (-28). This index has been negative since April. The GfK index of consumer confidence reflects people’s views on their financial position and the general economy over the past year and in the next 12 months. A score above zero suggests positive opinions; a score below zero indicates negative sentiment.

London's Economy Today supplement: COVID-19 - London macroeconomic scenarios (December update)

• London’s real GVA is expected to fall by an unprecedented 9.5% this year because of the COVID-19 crisis. Economic recovery will start next year although at a lower speed than the previous fall (6.2%) and will continue stronger in 2022 (6.9%).
• In terms of employment (workforce jobs), the impact will be relatively small this year (-1.1%) due to the Governement’s support in maintaining jobs but when this support ends in 2021 net job destruction is expected to be larger (-4.6%).
• The economic recovery is now expected to be overall slower in the medium-term than what predictions suggested earlier this year.

London’s Economy Today data on the Datastore

• The main economic indicators for London are available to download from the Datastore.