15th January 2015
The financial outperformance of the capital in recent years has dramatically widened the economic gap between London and the rest of the country claims new research from Halifax.
The latest “London Factor” report from the lender shows that the capital’s economy has outperformed all other regions since the economic downturn, increasing by 20% in monetary terms between 2009 and 2013 compared with a mere 13% increase for the UK as a whole.
Earnings and incomes are significantly higher than elsewhere in the country, and home prices in the capital have risen by an eye-watering 49% since mid-2009; significantly above the 19% rise nationally.
In fact, at £356,054, the average house price in London is nearly £170,000, or 90% above the UK average of £187,362.
Added to this, London is the most expensive place for a first-time buyer to own and run a house in the UK, with the average annual cost – at £15,699 – almost double the UK average of £8,126.
Overall, London now accounts for 13% of the UK’s population yet produces 22% of the country’s economic output.
However savings in the capital are lower in relation to earnings than elsewhere in the UK – 26% of annual pre-tax earnings against 35% nationally – which may partly reflect its younger age profile.
Martin Ellis, Halifax economist, said: “As a leading global city, London provides major economic, social and cultural benefits not just to those who live in the capital but also for the rest of the country. The London economy has performed more strongly than any other part of the UK in recent years, resulting in a widening gap between the capital and the rest of the country.
“This economic success, however, comes at a cost. Property prices are substantially higher than elsewhere in the UK and the property divide has widened further in recent years. Crime also tends to be higher.”
The report also found: