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The London Economy

The London Economy. Justine Lovatt - LCCI Economist November 2002. LCCI Economic Research. London Economy Research Programme – NIESR econometric model forecasts and quarterly London Economic Review London Monitor business confidence surveys. London’s GDP in 2002.

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The London Economy

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  1. The London Economy Justine Lovatt - LCCI Economist November 2002

  2. LCCI Economic Research • London Economy Research Programme – NIESR econometric model forecasts and quarterly London Economic Review • London Monitor business confidence surveys

  3. London’s GDP in 2002 • London’s GDP is forecast to rise by only 1.5% in 2002. • This is above NIESR’s forecast for the UK economy of 1% for 2002. • London is suffering from an economic downturn but is not in recession.

  4. London/UK GDP 1998-2005

  5. London’s Economic Downturn • Unemployment in London is now the highest in the UK at 7.5%. • The only sector to have increased employment in the last 12 months is the public sector. • The City has been hit by Stock Market falls. Finance output forecast to fall 0.6% in 2002. • Manufacturing is in recession as in the UK with output forecast to fall 3.8% in 2002.

  6. Unemployment By UK Region

  7. Unemployment in London • London unemployment is now 40% higher than UK unemployment. • Unemployment has been higher in London than the UK over the past decade. Recently unemployment has risen faster in London than the UK. • Since 1995 unemployment has fallen in both the UK and London.

  8. London/UK Unemployment1997-2002

  9. A Two-Speed Economy • The London economy, like the UK, is operating at two-speed with service sector growth much higher than industrial production. • In 2001 and 2002 the industrial production sector has been in recession whilst the service sector has recorded healthy growth.

  10. A Two-Speed Economy

  11. London Growth To Improve • The London Model forecasts that growth will pick up from 2003. • London is forecast to grow by 2.8% in 2003 compared to 1.5% in 2002. • But there are threats to London’s economic growth . . .

  12. Threats To The Economy • More Stock Market falls or housing market crash – both will reduce consumer spending. • War with Iraq – oil price etc • Public sector wage demands e.g. firefighters strike for 40% rise

  13. The London Monitor • The London Monitor is an LCCI monthly survey of business confidence. • Quarterly surveys are conducted in conjunction with the British Chamber of Commerce. • Balances show % of respondents expecting an improvement less % expecting things to worsen.

  14. UK Economy Predictions Q3 2002 Survey predictions for next year: • A balance of +5% expect UK economic growth to improve. • The balances for UK inflation (-23%), interest rates (-12%) and unemployment (-44%) are all negative (negative denotes to worsen/rise).

  15. UK Economy Predictions

  16. London Economy Today Q3 2002 Survey showed economic downturn: • A balance of only +5% said that their company’s output has increased over the past month. • This is the worst result since the November 2001 survey.

  17. London Economy Predictions Q3 2002 Survey predicts improvement in the short to medium term: • A balance of +27% expected growth to improve in London. • A balance of +59% expected their business to improve.

  18. London Business on Politics • In our October LM survey 77% of businesses rated Blair’s leadership skills highly. • Only 15% rated Iain Duncan-Smith highly. • Even Red Ken had a higher rating at 35%. • Bush was rated highly by 44% of businesses. • 66% supported an attack on Iraq, most only with UN approval.

  19. Conclusions • Economic growth is weak in London at 1.5% in 2002. Manufacturing and finance are currently in recession. • Economic growth should now improve. • Possible threats to this are housing market/Stock Market falls, war with Iraq and public sector strikes.

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