London's Economy Today - Issue 227 - July 2021

The overview

• The economy continues to pick up gradually although difficulties are becoming apparent
• London remains reliant on the furlough scheme despite labour market improvements
• Inflation continues to rise sharply

Economic indicators

• The PMI new business index in London steadied at 61.6 in June compared with 61.3 in May. The five months from February onwards are the first time there has been positive sentiment since September. The index is at its highest level for six years. An index reading above 50.0 indicates an increase in new orders on average across firms from the previous month.
• In June, expectations for house prices for the next three months remained positive according to surveyors with the net balance of house prices expectations at 2 in London, down on the figure for May of 37. The net balance index measures the proportion of property surveyors reporting a rise in prices minus those reporting a decline.
• In July, the consumer confidence index in London dropped to -1, from 0 in June. 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: London’s economic activity 1998-2019

• London’s GVA rose to £468bn in 2019 from £448bn in 2018, growth of 2.4% (after inflation). The value of UK economic activity came to £1,977bn in 2019, growing by 1.4% over the previous year.
• London’s share of national output has been rising for the past 20 years. Four of its local authorities, Westminster, City of London, Camden and Tower Hamlets, have been responsible for a growing share of London’s output, and this is now over half of all output. They are amongst the areas with the highest productivity, and highest productivity growth, in London.
• The growth in output is associated with the importance of the Finance, Information and Communication, Professional services, and Real estate sectors to the London economy. While up to 2019 inner London continued to be attractive to these sectors, and as a place to work more widely, there is some evidence that these sectors may be becoming less important to London’s economy overall. Although this is by no means certain, but if so a process of re-structuring may be starting.

London’s Economy Today data on the Datastore

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