New analysis published by Centre for London suggests that London’s ‘soft power’ is holding the capital in good stead in the face of Brexit and recent terrorist attacks, with an uptick in international visitors and spending over the last quarter. Unemployment is at a record low and gradual job growth continuing, but property market and migration indicators suggest continuing uncertainty.
Published in The London Intelligence, Centre for London’s quarterly review of demographic, housing, transport, economic and quality of life data, the analysis is helping to deepen understanding of how London is performing and changing over time.
The analysis found that international visitors continue to flock to London, thanks to London’s cultural appeal and the weaker pound. The data showed that:
- Nearly 5.5 million international visitors came to London in the second quarter of 2017, an 11 per cent rise from the same period last year.
- Total visitor spending was up by 15 per cent, with an average spend per visitor of just under £625, 3.5 per cent higher year-on-year. This is a benign impact of the weakening pound in recent months.
- At the same time, London’s major attractions continue to attract visitors, bolstering the capital’s position as a global and national hub for cultural activities; the three months to June saw a 6.6 per cent increase in footfall year-on-year.
- The figures also indicate a faster pace of growth for attractions outside central London (11.7 vs 5.5 per cent), which indicates London’s cultural economy is spreading geographically.
- Despite recent high profile terror attacks, Londoners’ concern about this has fallen in the third quarter of this year – only 7.3 per cent highlighted it as a main issue, which is much lower than GB as a whole.
Meanwhile London’s economy also remains stable, with low unemployment, a growth in public sector jobs, and a decrease in the number of young people who were not employed or in education. The analysis found that:
- The rate of unemployment in London has fallen to an historic low – to 4.9 per cent for the three months to August;
- Public sector jobs have started growing again, having shrunk by almost 100,000 over five years. Numbers bottomed out at 739,000 in summer 2016, but grew to 744,000 over the following year, perhaps reflecting increased recruitment for social care and to build up capacity to deliver Brexit;
- The number of young people not in employment, education or training in London, stood at 9 per cent from April to June of this year – down 2.5 percentage points compared to the same period last year. Youth unemployment also fell, but remained higher than elsewhere in the UK.
- London’s schools continue to outperform those in England, while more school leavers go on to higher education institutions than the UK average (61 vs 51 per cent).
London’s businesses appear to have recovered a degree of confidence following the uncertainty around the election; The Lloyds Bank Regional PMI for London from September 2017 has recovered nearly two points since June, and now stands at 54.1 – the same level as UK-wide.
However, it is not a wholly positive story for the capital; national insurance number registrations, which indicate the number of foreign nationals coming to London to take up work, continued to fall in the second quarter of 2017, with a sharp fall among EU nationals of 17.5 per cent. This is bad news for London businesses as workers born in the European Economic Area (EEA) now hold 13 per cent of London’s jobs overall – and a quarter to a third of jobs in sectors like construction and catering.
Londoners themselves may also be feeling squeezed as the the cost of living continues to rise, and quality of life is impacted by poor air quality:
- Rents rose by 1.4 per cent in the year to August, the slowest rate of rise since 2011, however rising inflation and sluggish wage growth means that the cost of renting continues to rise in real terms.
- Pollution: background levels of smaller particles (PM2.5) – which have the most damaging health effects – were up 11 per cent from July-September. Future data releases will show any discernible effect of the T-Charge’s introduction on the 23rd October this year.
Richard Brown, Research Director at Centre for London said:
“London has a creative edge and cultural variety that distinguishes it from many other global cities. The capital is a magnet for students, tourists and investors from around the world – and this is helping London be resilient over a rocky few months of terrorist attacks and political uncertainty. The continuing success of London’s schools, and historically low unemployment rates are also good news for the capital.
“But the city still faces significant challenges: housing costs continue to rise faster than wages, job growth is slow and business confidence fragile. We urgently need clarity on a transitional trade agreement to maintain momentum, mitigate the impact Brexit will have on London’s economy, and minimise the impact on Londoners themselves.”
Paul King, Managing Director of External Affairs and Sustainability at Lendlease said:
“It is encouraging to see that London’s economy is currently stable and unemployment figures have fallen, however there’s no room for complacency and it’s essential that businesses become more proactive, investing in vocational education and training opportunities – especially for young people.”