The latest annual London Factor report from Halifax has shown that the London economy outperformed all other UK regions, increasing by 20.0% between 2009 and 2013 compared with the UK average of 13.4%.
London saw the highest percentage increase in workforce jobs between September 2007 and September 2014 with a 15.6% rise.
The capital has the highest Gross Disposable Household Income (GDHI) per head in the UK, at £21,446. This is 28% higher than the national average of £16,791.
Home prices in London have risen by 49% from their 2009 Q2 trough compared with a 19% increase nationally. Property prices in the capital are now 10% above their 2007 peak. Nationally, prices remain 6% below their 2007 peak.
Londoners have the lowest levels of savings relative to earnings. The average savings balance is equivalent to 26% of average earnings in the capital, whereas the average proportion in England and Wales is 35%.
London accounts for 13% of the UK’s population yet produces 22% of the country’s economic output. The capital’s economy has outperformed all other regions since the economic downturn, increasing by 20% in monetary terms between 2009 and 2013 compared with a 13% increase for the UK as a whole.
Earnings and incomes are significantly higher than elsewhere in the country, and home prices in the capital have risen by 49% since mid-2009; significantly above the 19% rise nationally. Added to this, those living in London tend to be more highly educated and have above average life expectancy.
On the downside, savings in the capital are lower in relation to earnings than elsewhere in the UK – 26% of annual pre-tax earnings against 35% nationally – which may partly reflect its younger age profile, Halifax said. Crime is higher and property prices and costs associated with running a home are considerably higher than in any other region in the UK.
Martin Ellis, Halifax Economist, said: “As a leading global city, London provides major economic, social and cultural benefits not just to those who live in the capital but also for the rest of the country. The London economy has performed more strongly than any other part of the UK in recent years, resulting in a widening gap between the capital and the rest of the country.
“This economic success, however, comes at a cost. Property prices are substantially higher than elsewhere in the UK and the property divide has widened further in recent years. Crime also tends to be higher.”