London Daily

Focus on the big picture.
Saturday, Aug 01, 2026

London's 19% economic surge underlines divide with rest of England

London's 19% economic surge underlines divide with rest of England

England and Wales GDP figures by ONS show West Midlands is second in growth league

London’s economy has outstripped all other English regions with a 19% surge in growth since 2012, highlighting the divide between the capital and the rest of England.

The Office for National Statistics underlined the city’s disproportionate economic heft in its first set of regional GDP figures for England and Wales, which showed the north-east with the slowest growth over the same period at 5.9%.

The West Midlands economy, home to the UK’s biggest carmaker Jaguar Land Rover, came second to London after it expanded 16.5% over six years from 2012 to the end of 2018.

The figures are likely to reinforce calls for the government to renew focus on its industrial strategy, which is struggling for impetus as Whitehall pours resources into Brexit preparations.

Carys Roberts, chief economist at the IPPR thinktank and head of the Centre for Economic Justice, said: “The fact that growth from all regions of England has consistently lagged behind that from London is a clear indicator that something is wrong in the economy. Such regional inequalities hold back productivity, wages and people’s standard of living and quality of life.

“We need a new industrial strategy act setting out clear goals that focus on putting this right. We should be building high-tech industrial clusters around our many world-leading research-based universities. And we should set up a new national investment bank to invest in infrastructure, innovation and business growth across England.”

However, the ONS figures, compiled from about 1.9m VAT returns supplied by businesses rather than the traditional GDP method of company surveys, included quarterly data for 2018 that showed a downturn in London’s fortunes. The capital’s economy showed no growth in the last three months of 2018, while Wales topped the table in the final quarter with growth of 0.3%.

The north-east has the lowest increase in regional GDP since 2012, with London reporting the highest.

A flagging financial services sector was largely to blame for London’s zero growth rate , having been affected by Brexit uncertainty that has resulted in thousands of jobs leaving the capital’s financial district. According to the ONS data, London’s financial services sector has been in recession since the third quarter of 2017. London’s building industry has also proved sensitive to Brexit uncertainty, with a host of projects mothballed. However, the downturns in two key London industries have not reduced the sizeable gap with other parts of the country.

The worst-affected region most recently, according to the new figures, was the south-west. Its economy shrank in the last three months of 2018 compared with a year earlier. The figures also show that the east and south-west of England suffered technical recessions, or two successive quarters of negative growth, last year.

Representatives of the “northern powerhouse” in Manchester and the mayor of the West Midlands, Andy Street, have called for greater powers and more funds for infrastructure projects, including the much-delayed and overbudget HS2 railway line, which is intended to run from London to Birmingham, then Manchester and Leeds. However, the future of HS2 is in doubt after the government confirmed this week that the first phase of the line could be delayed by five years while the cost of the entire route has risen from £55.7bn to up to £88bn.

The Welsh economy grew in the second half of 2018, despite fears that steelworks closures and threats to the livelihoods of sheep farmers would harm the country’s overall economic performance. Construction was the main driver of Wales’s economic performance, while manufacturing output fell.

But it was outstripped in the final quarter of 2018 by the south-east, which expanded by 0.8%.

Economists expect the West Midlands to drop back this year as the dramatic fall in car purchases and production takes its toll on the vehicle industry. Much of the construction boom in Birmingham and the surrounding area has also followed government assurances that HS2 would be operational in the middle of the next decade.

The car industry represents one of England’s biggest economic strengths outside of London, with Nissan operating a key site in Sunderland, Toyota having a presence in Derby, Mini running a plant in Oxford and Vauxhall operating sites in Ellesmere Port and Luton.

The ONS said it planned to continue using VAT data to build a more comprehensive picture of economic growth in the UK, although Scotland and Northern Ireland produce their own data, using a different methodology.

Newsletter

Related Articles

0:00
0:00
Close
Finland Deploys Commercial-Scale Thermal Batteries Using Crushed Rock to Store Renewable Grid Energy
Valued at $109 Million: F-35B Fighter Jet Crashes in Southern California
Sainsbury Agrees to Sell Argos in £120 Million Deal to Private Consortium
High Court Clears Way for Construction of Chinese Embassy at Royal Mint Court
UK Fuel Prices Climb to Multi-Month Highs as Strait of Hormuz Tensions Disrupt Oil Supplies
Severe Summer Drought and Record Heat Put UK Harvests at Risk
Prime Minister Andy Burnham Faces Labour Backbench Opposition Over Potential Support for New North Sea Oil and Gas Drilling
Bank of England Warns Inflation Will Stay Above 3% as Middle East Energy Shock Prolongs Cost-of-Living Pressures
Andy Burnham has Announces Plans to Redistribute Income Tax Revenue to English Mayors
Early-Release Scheme Faces Fresh Scrutiny as Reoffending and Prison Recalls Rise
Police Phone Checks Followed Report on Murder of MI5 Agent Inside Sinn Féin
Archbishop of Canterbury Reaffirms £100 Million Reparative Justice Fund During Ghana Visit
Charities Allege French Police Used Tear Gas Against Channel Migrants
Norwegian Teenager Convicted Over Iran-Linked Murder Plot in Britain
Christian Organisations File Charity Complaints Against Amnesty International UK
Ofgem Tightens Grid Connection Rules for New Data Centres
FTSE 100 Reaches Record High Despite Global Technology Sell-Off
Millions of UK Households Urged to Check Eligibility for Winter Energy Discount
Labour Restores Parliamentary Whips to Diane Abbott and Joani Reid
UK Supreme Court to Hear Challenge Over Palestine Action Ban
UK Commits More Than £8.4 Billion to Dreadnought Nuclear Submarine Programme
England Declares Severe Drought as Wildfire Burns Near Sizewell Nuclear Site
Bank of England Holds Interest Rates at 3.75% as Middle East Tensions Fuel Inflation Risks
Drought Status Extended Across All of Wales as Heat and Dry Weather Deepen Environmental Strain
Record-Low Danube Exposes Probable Mammoth Remains in Bulgaria
UK Business Confidence Climbs to Four-Month High
Greater Manchester Gains Expanded Powers Under Regional Funding Reforms
UK Supreme Court to Hear Appeal Over Palestine Action Terror Ban
Shell's Quarterly Profit Doubles to Nearly $10 Billion on Higher Energy Prices
UK Government Removes VAT From Household Electricity Bills
Exceptional Drought Grips Half of England as Wildfire Threatens Sizewell
Bank of England Holds Interest Rates at 3.75% as Inflation Risks Persist
US Says It Has Carried Out Heavy Strikes on Iran After Attempted Attacks on Its Forces
The chief executive of the popular gaming company laid off many employees and his pay rose to 38 million dollars
UK Employment Holds Steady as Wage Growth Remains Moderate
England to Introduce Artificial Intelligence into Secondary School Curriculum
Wales Launches £1.2 Billion Industrial Regeneration Programme
High Court Upholds UK Digital Surveillance Framework
Northern Ireland Reaches Budget Agreement on Infrastructure and Public Sector Pay
Home Office Expands Digital Border Checks Nationwide
UK Approves Major North Sea Wind and Carbon Capture Project
The World's Most Terrifying Smartphone: Recording, Documenting, and Reporting to the Regime
Scotland Approves Major Renewable Energy Expansion
UK and United States Sign AI and Semiconductor Cooperation Pact
UK Treasury Tightens Fiscal Controls After Gilt Market Volatility
Bank of England Holds Interest Rates at 4.5%
UK Unveils £10 Billion NHS Funding Overhaul and Workforce Reform
The AI User Nightmare: Private Claude Conversations Leaked to the Internet
UK: Former Football Association Leaders Call for World Cup Boycott Over FIFA Privatization Plan
Forbidden Love: China severs millions from their virtual partners
×