London’s Economic Outlook – Spring 2016
Despite a slowing global economy the economic forecast remains positive for London.
Gordon Douglass from GLA Economics goes through the latest economic forecast.
Since our previous forecasts were published in the autumn of 2015 economic conditions in London have slowed a touch but remain more upbeat than for the UK as a whole, despite continuing signs of a global slowdown. And, as outlined in our bi-annual economic forecast, ‘London’s Economic Outlook’ we expect:
Activity in London to continue to grow by 2.9 per cent in 2016. This growth will speed up a little in 2017 to 3.4 per cent before dropping back slightly to 3.3 per cent in 2018.
Employment growth to ease compared to the rapid pace seen in recent years to stand at 0.7 per cent in both 2016, 2017 and 2018.
Household incomes and spending in London to grow in each of the next three years helped by low inflation and a continued pick-up in earnings.
The following diagrams show what this means for jobs and growth, and how this compares to other independent forecasters. The light blue lines in the first two charts show past growth in employment and output, the black line on the right of the chart gives our forecast and the red lines what other forecasters think will happen to employment and output in the next couple of years:
Employment (annual growth, per cent)
Output (annual growth, per cent)
We also forecast output and employment in important sectors of London’s economy. The grey bars show our forecasts for employment and the blue line demonstrates how we expect economic output as measured by Gross Value Added (GVA) to change over the forecast period:
Finance and business (combined) – (per cent annual change)
Construction (per cent annual change)
Transportation and storage (per cent annual change)
Distribution, accommodation and food service activities (per cent annual change)
Manufacturing (per cent annual change)
Other (public & private) services (per cent annual change)
As well as data from the forecast, the report offers a commentary on the state of the London, the UK and the world economy. London’s economy continues to grow, with a number of indicators being positive although this has eased since the turn of the years. Growth in London’s economy is evident by the continuing growth in jobs. For example, figures for the final quarter of 2015 show this now stands at 5.765 million. That’s a new record and an increase of 1.5 per cent compared to Q4 last year.
Data for output growth calculated by GLA Economics also shows that London’s economy has been growing at a faster rate than the UK at the end of 2015. Consumer confidence remained very high into 2016 although confidence has recently fallen back from these highs whilst remaining positive. While a number of surveys also show continued but moderating business confidence in the UK and London.
A number of risks are however on the economic horizon including the continuing structural problems in the Eurozone, low inflation, a slowdown in the word economy and at least short-term economic uncertainty caused by the looming referendum on the UK’s membership of the EU. You can read more about them and our latest forecast for London in London’s Economic Outlook: Spring 2016.
We also publish a monthly economic overview, London’s Economy Today.
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