London’s economic growth outpaces all other UK regions

London’s economy is the UK’s best-performing economy, registering the fastest expansion and the least impact from the coronavirus, according to data emphasizing the government’s challenge to “level up” the country.

Output in the UK capital rose 0.9 percent between the second and third quarters of last year, far exceeding the national contraction of 0.1 percent, the Office for National Statistics revealed on Thursday.

Production in Wales and Scotland fell 2% and 0.3% respectively over the same period, while growth was flat in Northern Ireland and England, where London performed best.

The expansion in the capital contrasted with a 1.6 percent contraction in the East Midlands, England’s worst-performing region.

Susannah Streeter, senior investment analyst at asset manager Hargreaves Lansdown, said: “London has kept the UK economy going, and the capital’s growth has been masking disappointing performance in much of the rest of the UK.”

Leveling up, reducing stark regional inequalities across the country, was a key theme of the ruling Conservative party’s 2019 election campaign. The leveling secretary, Michael Gove, published a white paper last year to address the problem.

However, Streeter said the first round of equalization policies “clearly failed to have much of an impact on the movement of the economic dial for regions in need, and London still appears to be the magnet for investment.”

London, which is by far the richest region in the country, was also the best performer compared to pre-pandemic levels. While production in the UK has yet to recover to the level it reached in Q4 2019, it was 4.4% higher in the capital. In the midlands and east of England, production was still more than 2 per cent below its pre-pandemic levels.

Krishan Shah, an economist at the Resolution Foundation, a think tank, said the London figures were “defying pandemic predictions of the death of cities.”

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The ONS data showed that London’s economy, relative to pre-pandemic levels, was boosted by strong growth in information, communications and financial services, which account for a larger share of output in the capital than in other regions. By contrast, output in other sectors, including construction, real estate and manufacturing, was still below pre-pandemic levels.