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London was the primary drag to UK productiveness development between 2019 and 2022, a development that pushed the effectivity hole between the capital and the remainder of the nation to its lowest degree on file.
Output per hour labored fell 2.7 per cent in London between 2019 and 2022, in distinction with a 2.5 per cent growth throughout the UK over the 4 years, the Workplace for Nationwide Statistics stated on Monday.
The decline left the capital 26.2 per cent extra productive than the countrywide common, the smallest lead since comparable data started in 1998 and nicely under the 2007 peak of almost 40 per cent.
The figures level to the influence of the Covid-19 pandemic on the engine of the UK economic system in addition to the spreading of productiveness development extra evenly throughout the nation.
“It’s unlikely that the subsequent authorities will preside over rising dwelling requirements within the UK with out London firing once more,” stated Paul Swinney of the Centre for Cities think-tank.
UK productiveness total has largely stagnated because the monetary disaster following many years of sturdy development, a development that has weighed on dwelling requirements and is named Britain’s productiveness puzzle.
Swinney stated the development for London “explains a big a part of the UK’s wider productiveness woes” because the capital led each the sturdy nationwide development seen earlier than 2008 and its subsequent poor efficiency.
London is the UK’s largest and richest regional economic system and a key supply of revenues for public funds.
Within the fiscal 12 months to Could 2023, Londoners paid £5,000 extra in tax than they obtained in public spending, whereas Britons obtained £1,894 greater than they put within the public coffers.
However current revisions to GDP knowledge confirmed the London economic system underperformed the nationwide common since 2019, in distinction with early estimates of upper development within the capital.
London contracted greater than the remainder of the nation through the pandemic, in accordance with revised knowledge, pointing to the hit from Covid-19 restrictions to exercise and worldwide journey.
Bart van Ark, managing director on the UK-based Productiveness Institute, stated London’s efficiency was “a priority and can have to be attended carefully from the angle of worldwide competitiveness”.
However he added the narrowing hole between London and the remainder of the nation could counsel “the UK is lastly starting to maneuver away from its one-engine mannequin the place solely London and the South East are pulling the cart”.
ONS knowledge confirmed that labour productiveness since 2019 rose by 7.9 per cent within the North West and elevated by 5.5 per cent within the South East.
The North West was 6.8 per cent much less productive than the UK common in 2022, a smaller hole than the 11.3 per cent shortfall in 2019.
