Regions should be doing more to reap economic benefits from London

Date: 12/11/2007

A report from the Centre for Cities released today (Mon) exposes massive variations between England’s regions in terms of the gains they make from London’s economic success. While London’s importance to the UK economy is indisputable, the economic benefits of a strong London are mainly felt in the Greater South East – and other parts of the UK are not tapping its full potential.

London’s Links argues that Northern regions could be doing more to develop trade and investment links with London – links which would create more jobs in their own regions. This trade could be enhanced by, for example, better transport links with the capital, or a more strategic approach by Regional Development Agencies towards building economic links with London.

London imports over £100bn in goods and services from other regions each year – for example, manufactured goods from the Midlands, and call centre services from Leeds and Manchester – and in doing so, supports many jobs in other regions. The value of London’s economy via these trading links is many times higher than the net contribution the capital makes to the economy in tax (estimated by Oxford Economics at £12.7bn for 2005/06).

But there are wide variations across the country. The South East benefits most from trade with London, with sales to London estimated to be worth nearly £28.1 billion to the SE economy. However, in the North East, sales to London are worth less than one-tenth of this.

Sales to London by English region (£ bn)

Source: Oxford Economics 2004 London’s Linkages with the Rest of the UK London: Corporation of London.

Dermot Finch, Director of the Centre for Cities, said: “London’s global strength is vital to the British economy – and our capital needs continuing investment, such as Crossrail, to maintain its success. But new transport links are vital between London and other regions too, to ensure that trade between other regions and the capital grows. At the moment, Reading makes more from London than Rotherham, and Brighton benefits more than Burnley.

“Regional Development Agencies, the Mayor of London and other city leaders should promote stronger trade and investment links between London and all other cities. This will help spread economic growth, by creating jobs across the country.”

London’s Links by Paula Lucci and Patricia Seex is available here

For more information, please contact Claire Hibbitt, c.hibbitt@centreforcities.org tel +44 (0)20 7803 4315 / +44 (0)7796 175 248

Note to Editors

The City of London’s most recent report on London’s Place in the UK Economy, 2007-08 was released on 17 October 2007. The report highlighted the increased importance of London’s wealth and tax generating capabilities, indicating that London accounts for 19% of UK GDP and 15% of jobs. See www.corpoflondon.gov.uk