Editor: Amid macroeconomic uncertainty, with one prominent fund manager describing London as a “backwater” of global markets, is the capital ready to compete against the likes of New York, Paris, Berlin and Hong Kong?
London Property Alliance’s latest Global Cities Survey shows that the London economy has continued to perform modestly, with growth forecasts narrowly preventing recession this year. This is despite the fact unemployment ticked up in Q1. While this measure of joblessness in the capital was the highest for any region of the UK, it was below all the other above-mentioned cities, barring Hong Kong.
Employment growth is, as of now, still proving to be robust, with London likely to be in a stronger position on this measure than every city apart from Paris.
Prime office rents in London’s West End have grown by 9% this year. Meanwhile, with Manhattan’s vacancy rate over 22%, the pain in its office market shows little sign of receding. Hong Kong vacancy too is in double-digit territory, although with the comparatively late opening up of its economy, this might mark a peak of sorts.
London has continued demonstrating good progress in public transport usage, which is now at 89% of 2019 levels. Paris hit a remarkable 114% of its pre-Covid-19 numbers in Q1 2023.
However, it is in the area of international visitors where London lags behind its peers. New York airports have now surpassed 2019 levels with numbers at 104% of benchmark. Airbnb occupancy rates, a key indicator of tourist demand, have London well behind at 65%; Paris and Berlin in comparison are both above 76%.
To help improve our competitive position in tourism, an independent review of the economic impacts of tax-free shopping would be a welcome move by government. Furthermore, a wider, renewed interest in the London economy by central government – to maximise the city’s role in delivering economic growth – would be a much-needed step forward.
Alexander Jan, chief economic adviser to the London Property Alliance