London Daily

Focus on the big picture.
Saturday, Mar 14, 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
Middle East War Highlights Strategic Importance of Strong UK–Ireland Cooperation
Weak Growth Signals UK Economy Was Faltering Even Before Middle East Energy Shock
Marks & Spencer Tops UK Fashion Retail Rankings as Most Considered Brand
United States Launches Trade Investigation Into Allies Over Forced Labour Practices
United States Launches Trade Investigation Into Allies Over Forced Labour Practices
Russia Accuses Britain Over Storm Shadow Strike as London Reaffirms Ukraine’s Right to Self-Defence
Russia Accuses Britain Over Storm Shadow Strike as London Reaffirms Ukraine’s Right to Self-Defence
Royal Navy to Acquire Twenty Uncrewed Surface Vessels for Autonomous Warfare Testing
Russia Summons British and French Envoys After Ukrainian Storm Shadow Strike on Strategic Facility
Starmer Confirms Britain Will Maintain Sanctions on Russia Despite U.S. Policy Shift
UK Moves to Refine AI Definition in Investment Security Reform
UK Economy Stalls in January as Growth Unexpectedly Falls to Zero
Asian Energy Security Tested as Strait of Hormuz Disruption Threatens Oil Supplies
Iran Sets Three Conditions for Ending Regional War as Diplomatic Efforts Intensify
Tesla Secures Approval to Supply Electricity Directly to Homes Across Britain
Prince William Delivers Tribute to Australia’s Naval Alliance Amid Renewed Royal Spotlight on the Country
UK Foreign Secretary Travels to Saudi Arabia to Reinforce Support for Regional Allies
Putin’s ‘Hidden Hand’ May Be Assisting Iran in Conflict With Trump, UK Defence Secretary Warns
UK Sets April Deadline for Tech Platforms to Strengthen Online Protections for Children
Elon Musk Moves Into Britain’s Energy Market as Tesla Wins Licence to Supply Power
UK Watchdog Warns Fuel Retailers Against Profiteering Amid Iran War Price Surge
Report Claims Iran Used UK Charity Network to Expand Influence
United States and United Kingdom Establish Joint Standards for Counter-Drone Technology
Iran May Be Laying Naval Mines in Strait of Hormuz, UK Warns Amid Escalating Gulf Tensions
US Deploys Bunker-Buster Bombs to UK Airbase as Iran Conflict Intensifies
British Troops in Iraq Intercept Iranian Drones Targeting Coalition Base
Release of Mandelson Files Raises Tensions as UK Seeks Stable Relations With Donald Trump
UK Documents Reveal Starmer Was Warned About Mandelson’s Epstein Links Before Ambassador Appointment
Nearly Five Hundred UK Mortgage Deals Withdrawn in Two Days as Market Volatility Forces Lenders to Reprice
Three Cargo Ships Hit Near Iran as Attacks Spread to Strategic Strait of Hormuz
Why British Police Repeatedly Declined to Investigate Jeffrey Epstein’s UK Links
UK Parliament Ends Hereditary Seats in House of Lords, Closing Chapter on Centuries of Aristocratic Lawmaking
EU and UK Urge Israel to Act Against Rising West Bank Settler Violence Amid Regional Tensions
US Senator John Kennedy Says Keir Starmer Should Not Be Trusted for Military Advice Amid Iran War Debate
UK High Court Rejects Attempt to Revive Terrorism Charge Against Kneecap Rapper
Revolut Secures Full UK Banking Licence After Multi-Year Regulatory Wait
Kentucky’s Bench Boost Powers Wildcats Past LSU in SEC Tournament Opener
British Couple Die After Being Pulled From Water at Australian Beach During Family Visit
Global Energy Agency Announces Record Release of 400 Million Barrels to Stabilize Oil Markets Amid Hormuz Disruption
British Airways Suspends UK Repatriation Flights as Middle East Travel Disruption Deepens
US Forces Prepare Ordnance at RAF Fairford as Strategic Bombers Deploy for Middle East Operations
Nigel Farage Faces Criticism After Saying Britain Should Stay Out of Iran War
Landmark UK Trial Begins Over Sony’s PlayStation Store Pricing
UK High Court Rejects Bid to Challenge Britain’s Chagos Islands Agreement With Mauritius
Finnish Duo Triumphs in England’s Annual Wife-Carrying Race, Winning a Barrel of Ale
How U.S. and UK National Security Strategies Are Reshaping the Global Business Landscape
Green Party Gains Momentum as Labour Shifts Toward the Political Centre
Royal Navy Destroyer HMS Dragon Sets Sail for Eastern Mediterranean as Regional Tensions Rise
UK Homebuilder Persimmon Warns Iran Conflict Could Dent Property Buyer Confidence
Roman Abramovich Signals Legal Fight if UK Seeks to Seize Chelsea Sale Funds
×