London's boom 'will generate a third of Britain's entire growth in 2014'

 

London is entering an economic boom that will see the capital generate almost a third of Britain’s entire growth next year, a report forecasts today.

The capital’s growth rate is set to hit two per cent this year and 3.8 per cent next year — far outpacing other regions and sealing London’s status as the economic powerhouse of Britain.

Forecasts from the Centre for Economics and Business Research say growth is returning to the city far faster than expected. Its figures are a sharp upgrade from the July forecasts of 1.3 per cent this year and 2.1 per cent next year. A boom in business services and technology firms, along with professional services such as law and architecture, is set to fuel the success.

The forecasts suggest that the city will be back to its pre-crash peak this year, while the rest of the country is growing by around 1.6 per cent. Cebr’s forecasts show that London will contribute about 0.8 per centage points of the 2.7 per cent growth expected for the UK in 2014 — almost a third.

“The capital is punching above its weight,” Cebr said, pointing out that the city has only a fifth of output and 13 per cent of jobs.

From 2015 to 2018, Cebr predicts healthy growth of 2.6 per cent in London, as Government spending cuts act as a brake. Despite public sector cuts, the capital’s output will be some 16 per cent higher by 2018 than it was before the crash in 2008.

Unemployment in London should fall to 7.2 per cent by 2018, down from an estimated 8.5 per cent this year. The jobs growth is set to be boosted by the City’s revival, with around 100,000 professional and financial and business services jobs expected to be created in central London by 2018, Cebr said.

However, Cebr senior economist Rob Harbron cautioned: “The forecasts also illustrate how even the rapidly growing capital will be affected by the public sector spending cuts.”

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