Sample report - Experian · Forecast highlights London continues to outperform UK benchmarks despitesome slowing As is the case across all UK regions, London’seconomyremains at

Greater London

Economic Outlook

Sample report

© Experian Economics

Greater London Economic Outlook

Sample Report

2016 2017 2018 2019 2020-22

2.6 2.0 1.7 2.0 1.5

2.2 1.6 0.3 0.9 0.7

5.8 5.4 5.3 5.7 5.9

0.4 0.6 1.5 0.6 1.4

10.1 3.1 2.0 3.1 4.3

1.6 1.4 1.2 1.3 1.1

1.7 1.8 1.3 1.5 1.6

1.4 1.2 0.0 0.6 0.3

4.9 4.4 4.3 4.5 4.5

0.3 0.2 1.1 0.6 1.1

7.6 5.0 2.0 2.7 3.6

1.2 0.6 0.5 0.7 0.6

Full Time Equivalent Employment

Average Growth %

Greater London

Gross Value Added

Full Time Equivalent Employment

Unemployment Rate

Disposable Income

House Price Growth

Working Age Population

United Kingdom

Gross Value Added

Unemployment Rate

Disposable Income

House Price Growth

Working Age Population

Greater London: Recent trends and short-term outlook

London has outperformed the

rest of the country despite its

key sectors coming under

pressure from Brexit. The

capital has seen job creation

continue at a reasonable

pace. We expect the capital to

see output rise by 1.7% in

xxxx and by a further 2.1%

p.a. over xxxx-xx.

Forecast highlights

London continues to outperform UK benchmarks despite some slowingAs is the case across all UK regions, London’s economy remains at risk as Brexit-related fears and uncertainty weigh on

investment and hiring in all key sectors. For London, it is the issues of passporting rights and the rights of EU workers

currently employed in the UK that form the basis of these fears. Should there be a hard Brexit, under which the rights of EU

migrant workers and passporting rights are both revoked, this will have a real impact on London’s economy. At the time of

writing this report, there was still no clarity on what the final Brexit outcome would be for migrants and finance & business

sector trading rules. However, at least in the short-term, London is still holding up well on most key economic indicators

despite some slowing in growth. According to our recent estimates, London enjoyed GVA growth of 2% in xxxx, just

ahead of the UK average. Job creation in the capital (FTE measure) was 1.6% in xxxx, while UK growth was 1.2%. The

unemployment rate has edged down to 5.4% in xxxx (from over 10% in xxxx) although this does remain higher than the

national average of about 4.4%. House prices in London saw growth of 3.1% in xxxx, falling short of the pace of increase

seen across the UK. These indicators confirm that not only has London avoided a sharp slowdown, it continues to rank

favourably on many measures.

Sources: ONS, DCLG, Experian

2

Key sector trendsOur latest forecasts show that while the uncertainty caused by Brexit

negotiations will weigh on investment and hiring, overall growth in the key

sectors will be positive. In London, the financial sector is under the greatest

threat from Brexit. Despite this, the sector still posted 1.9% growth in FTE jobs in

the sector in xxxx and further 0.3% growth p.a. in xxxx-xx. This is weaker growth

than seen in the previous decade but that is also due to a generally reduced

appetite for risk and consolidation in the sector. Professional services will see

better output growth of 2.6% p.a. over xxxx-xx and this will marginally

strengthen to 2.7% p.a. after that. The construction sector will see more muted

growth of 1% p.a. over xxxx-xx, picking up to over 1.5% p.a. over the longer

term. The information & communication sector remains the strongest in London,

posting robust growth of around 4.9% p.a. in xxxx, with further growth of 2.7%

expected over xxxx-xx, as investment by high-tech firms into the capital

continues.



Sample Report

2015 2016 2017 2018 2019

US$ per £ (y/e) 1.52 1.24 1.33 1.37 1.39

£ per € (y/e) 0.72 0.87 0.91 0.87 0.86

REER (Jan 2005=100) 117.3 97.7 99.3 102.3 104.1

UK Prospects & Key Risks

Recent

Trends

UK GDP growth fell to a five-year low of just 0.1%

(q-on-q) in the first quarter of xxxx. On a per-capita

basis, the economyshrunk by 0.1%.

Business

Planning

Assumptions

The Bank Rate rose by 25bps, to 0.5% in November

last year. An increase of the same magnitude is

likely later this year.

2-Year

Outlook

Real GDP growth is forecast to grow by 1.3% in

2018, down from 1.8% in xxxx.

Key risks: The momentum gathering in the global

economy falters. The emerging trade war between

China and the USA is of particular concern. Wage

growth fails to accelerate holding back consumer

spending further.

Longer-Term

Outlook

GDP growth of 1.6% a year in xxxx-xx, with annual

employment growth of 0.5%.

Key risks: Public finances suffer from low economic

growth and relaxation of austerity to support the

economy. High debt exposure of public and private

sectors becomesa serious burden.

Consumer Spending growth to be sustained but at a much

slower pace than in recent years.

Key risks: Lingering above target inflation and weak

earnings growth inhibit spending. Further Bank Rate

hikes hit highly-exposed borrowers.

Trade Trade will benefit from sterling’s decline and net

trade will be less of a drag on GDP growth.

Key risk: Sterling continues to appreciate,

diminishing export price competitiveness.

Inflation Inflation eased to 2.5% in March.

Key risk: The recent appreciation of the sterling

exchange rate reverses, and renewed import price

pressures build. The upward trend in global oil prices

continues.

Labour

Market

The strong gains in employment growth in recent

months is unlikely to be sustained. Competition for

employees should see pay gains slowly accelerate

through xxxx.

Key risk: The recent pick-up in productivity growth

falters, holding back wage growth.

Government Fiscal policy expected to loosen in the coming year

as suggestedby the Chancellors Spring Statement.

Key risk: An easier fiscal stance could raise

concerns about the impact of high government debt

on growth prospects.

Interest ratesAt its meeting ending on 9 May xxxx, the

Bank of England’s Monetary Policy

Committee (MPC) maintained Bank Rate

at 0.5%. The MPC voted seven-to-two

against raising interest rates immediately,

with the majority saying that there was a

need “to see how the data unfolded over

coming months to discern whether the

softness in the first quarter might persist”,

leaving the path open for a rate rise in

August or November this year.

KEY RISK

The possibility of a fresh Sterling depreciation

as Brexit uncertainties persist is a key inflation

risk. This could lead to higher interest rates,

earlier than in the Base case.

Exchange ratesThe Bank of England’s effective exchange rate

index, a weighted average of the movements in

cross-exchange rates against a basket of other

currencies has been steadily rising on

expectations of further increases in Bank Rate

this year. Should the Bank disappoint on this

front sterling could depreciate.

KEY RISK S

Consumers will benefit as inflation slowly

eases in line with softer import prices.

However, household budgets remain under

pressure and this is expected to continue to

hold back outturns in the services industries,

the main engine of the UK economy,

throughout xxxx. Furthermore, the slight

narrowing in the trade deficit in xxxx, is not

enough to suggest that export led sectors such

as manufacturing can plug the gap left by

reduced services sector gains.

3

(% per annum) 2015 2016 2017 2018 2019

Base rate (y/e) 0.50 0.25 0.50 0.75 1.00

10 yr yield (y/e) 1.88 1.26 1.30 1.85 2.65



Sample Report

2017 2018-20 2020-24 2017 2018-20 2020-24UK 1.8 1.4 1.7 1.2 0.3 0.4Greater London 2.0 2.0 2.2 1.6 0.6 0.7South East 1.8 1.7 1.9 1.7 0.5 0.6East of England 3.1 1.5 1.7 1.4 0.4 0.5South West 2.5 1.3 1.6 0.6 0.3 0.4East Midlands 2.4 1.3 1.5 1.1 0.2 0.3West Midlands 2.2 1.2 1.5 1.9 0.2 0.3

Yorkshire & the

Humber1.0 1.1 1.4 0.5 0.1 0.2

North West 1.6 1.2 1.4 1.0 0.1 0.2North East 0.9 1.1 1.3 -0.3 0.0 0.1Wales 1.4 1.1 1.3 1.0 0.0 0.1Scotland 1.1 1.0 1.3 0.4 0.0 0.1Northern Ireland 2.1 1.0 1.3 1.1 0.2 0.1

% GrowthOutput Employment (FTE)

Local area focus

4

Source: Census,2011

Regional Comparison

To fully understand our forecasts, it is important to note the inter-dependence of local authorities as this is a key feature of

our model. The charts below show the commuting patterns for 2 major centres in this region and how they depend upon

both the jobs and the labour market of other local areas.

Sources: ONS, Experian

Areaswhere

residents

work

Areas where workers l ive

Outer Circle: Local areas from where workers employed in Westminster commute fromInner circle: Local areas where residents of Westminster work

Commuting FlowsWestminster

Areaswhere

residents

work

Areas where workers l ive

Outer Circle: Local areas from where workers employed in Camden commute fromInner circle: Local areas where residents of Camden work

Commuting FlowsCamden



Sample Report

5

Local area focus

Unemployment trends in the ten most populous local areas


Local Authority Average Annual GVA Growth (2017-2021)

Source: Experian

Employment

Growth (%)

2017 2018 2019 2020 2018=2022

5.4 5.8 6.2 6.4 3.7

7.3 7.4 7.5 7.5 3.0

4.2 4.4 4.7 4.9 2.8

5.8 5.9 6.2 6.5 3.2

6.2 6.4 6.5 6.6 1.5

6.6 7.0 7.3 7.6 3.1

6.9 7.1 7.4 7.5 3.4

7.6 8.2 8.7 8.9 3.4

8.0 9.1 9.9 10.4 3.3

4.4 4.6 4.8 4.8 2.7

Brent

Barnet

Wandsworth

Newham

Southwark

Lambeth

Enfield

Ealing

Croydon

Bromley

Unemployment Rate (%)

2016 2017 2018-2022

2.7 2.6 2.5

2.1 2.1 2.5

6.1 3.3 2.5

4.4 3.2 2.4

3.6 2.6 2.3

2.9 1.7 1.7

0.9 1.3 1.7

1.9 1.3 1.7

1.2 0.9 1.6

1.9 1.2 1.5Ealing

GVA Annual Growth (%)

Islington

Tower Hamlets

City of London

Camden

Westminster

Brent

Sutton

Hammersmith and Fulham

Merton

Top 5/Bottom 5



Sample Report

Key indicators 2017

Total Population (thousands) 8903.5

Working-age population (thousands) 6023.5

Population: 0-14 years (thousands) 1824.8

Population: over 65 years (thousands) 1055.2

Workforce (thouands) 5821.4

Participation rate (% of workforce) 81.4

15.0 10.0 5.0 0.0 5.0 10.0 15.0

0_9

10_19

20_29

30_39

40_49

50_59

60_69

70_79

80_89

90+

% population

Age

Co

ho

rt

GL United Kingdom

GL UK

#N/A 8.7

#N/A 5.4

#N/A -0.3

#N/A 29.1

Total Population

State Working Age

Student

State Retirement

2018-38 (% Change)

-

0.5

1.0

1.5

2.0

2.5Agriculture, Forestry &…

Mining and Quarrying

Manufacturing

Utilities

Construction

Wholesale & Retail

Transport & storage

Accomodation, Food…

Information &…

Finance & Insurance

Professional & Other…

Public Services

Location Quotient*

Greater London UK

Relative concentration of industry

0%

5%

10%

15%

20%

25%

30%

35%

40%

Agriculture, Forestry &Fishing

Mining and Quarrying

Manufacturing

Utilities

Construction

Wholesale & Retail

Transport & storage

Accomodation, FoodServices & Recreation

Information &communication

Finance & Insurance

Professional & OtherPrivate Services

Public Services

Industry share

Greater London UK

Demographic outlook

Greater London and UK Projections

Source: ONS

6

2016 2036

Sector composition

London’s economy has a heavy bias towards the fast-growing business service sector. In particular, the financial

and information & communication sectors have a strong presence in the capital. Manufacturing and construction

are less important to the economy in terms of output contribution, but infrastructure investment remains important

to London’s development. Consumer services also make a notable contribution to jobs and output growth and

while public services has a significant absolute presence in London, in relative terms its contribution is vastly

overshadowed by that of the private sector.

Greater London and UK Projections


*The location quotient measures the concentration of industries in a region relative to the UK average. A value of 1 means that the region has the same share of an industry as the UK while above/below 1 denotes a larger/smaller share. Data for xxxx.

Sources: ONS, Experian Sources: ONS, Experian


Greater London profile



Sample Report

2001-08 2018-38

3.5 2.0

1.1 0.7

7.1 5.5

1.2 0.9

0.8 0.7

4.9 1.9

3.5 1.9

9.2 4.2

Avg. annual growth (%)

Real house prices

Real household spending

Real household income

Total population

Working-age pop.

Unemployment rate (rate %)

FTE employment

GVA

-6

-4

-2

0

2

4

6

8

10

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

% c

han

ge, y

ear

-on

-ye

arGVAGL UK

2004-09 2015-17 2018-38 2004-09 2015-17 2018-38

Total GVA 2.5 2.2 2.1 0.9 2.0 1.7

Consumer

services0.1 2.3 1.7 0.1 3.1 1.6

Prof. services 2.0 0.6 1.9 2.2 2.5 1.9

Public sector 2.0 0.1 1.5 1.4 0.4 1.6

Total employment 0.8 2.2 0.7 0.2 1.4 0.3

Consumer

services0.3 1.5 0.7 -0.1 1.0 0.3

Prof. services 2.2 3.7 0.7 1.7 2.2 0.4

Public sector 2.0 0.0 2.0 1.7 0.2 0.6

% growthGreater London United Kingdom

Outp

ut

Labour

mark

et

Long-term outlookGrowth will outperform UK average



7



Source: Experian

Historically, London has held a growth premium over the UK

average and we expect this to be maintained. Key to this will be

London’s favourable sectoral mix, its high-skilled work-force and

the improving infrastructure will enable it to continue to grow at

an average annual rate of about 2.1% between xxxx and xxxx.

Furthermore, favourable demographic projections add

momentum to the growth profile. Job creation in the capital will

grow at a robust rate of about 0.7% p.a. in the long term, not far

off the pace witnessed historically.



Sample Report

UK local area outlook

8

Source: Experian




Sample Report

Contact

Rebecca SnowManaging Economist

E: [email protected]

T: +44 (0) 7966 874 720

Sadia SheikhHead of UK Regional Economics


T: +44 (0)20 3042 4713

Jon RawsonBusiness Development Director


T: +44 (0) 7811 270 989

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Sample report - Experian · Forecast highlights London continues to outperform UK benchmarks despitesome slowing As is the case across all UK regions, London’seconomyremains at

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