Some economic uncertainty but London’s economy likely to continue to grow
Gordon Douglass from GLA Economics goes through the latest economic forecast for London.
Since our previous forecast was published in autumn 2016, economic events have calmed down to some extent although Article 50 has been triggered formally starting the ‘Brexit’ process. Despite the economic uncertainty this has caused it has so far had limited impact on London’s economy which continues to grow and at a relatively fast pace. Still, uncertainty, especially around the course of the Article 50 negotiations, makes economic forecasting particularly fraught. That said, as outlined in our bi-annual economic forecast ‘London’s Economic Outlook’, we expect:
- Activity in London to continue to grow by 2.3 per cent in 2017. This growth will remain broadly stable in 2018 at 2.4 per cent before picking up a touch to 2.9 per cent in 2019.
- Employment growth to be moderate over the forecast years with it growing by 0.7 per cent in 2017, slowing a touch to 0.5 per cent in 2018 and then returning to 0.7 per cent in 2019.
- Household incomes and spending in London to grow in each of the forecast years but at a moderate pace.
The following diagrams show what this means for jobs and growth, and how this compares to other independent forecasters. The blue lines show past growth in employment and output, the black line gives our forecast and the red lines what other forecasters think will happen to employment and output in the next couple of years:
We also forecast output and employment in important sectors of London’s economy. Shown below is a selection of these forecasts; 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.
As well as data from the forecast, the report offers a commentary on the state of the London, UK and world economy and on the progress made on ‘Brexit’ plus different measures of economic growth since the financial crisis.
London’s economy continues to grow, with a number of indicators showing this expansion. Growth in London’s economy is for example evident by the continuing growth in jobs although this has eased a bit in recent months. Thus, figures for the first quarter of 2017 show these now stand at 5.751 million. That’s a new record and an increase of 1.1 per cent compared to Q1 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 in the final half of 2016. While a number of surveys show continued increasing business activity in the UK and London.
However, a number of risks are on the economic horizon, the most prominent continuing to be the uncertainty caused by ‘Brexit’. Other risks include: the continuing structural problems in the Eurozone; a number of conflicts around the world; and the size of Chinese debt. Although compared to the end of last year downside risks to the forecast have generally moderated a touch with upside potential also increasing as shown by the recent uptick in world economic growth. You can read more about them and our spring 2017 forecast for London in London’s Economic Outlook: Spring 2017.
Download the data that sits behind the forecast.
We also publish a monthly economic overview, London’s Economy Today
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