London makes a £34bn net contribution to UK public finances
London provided an estimated net contribution of £34bn to UK public finances in 2013/14, according to a new report published by the City of London Corporation, demonstrating London’s key role in helping to finance public spending, investment and service provision across the UK, as well as supporting jobs and growth across the country.
London’s Finances and Revenues – produced by Cebr – finds that London’s projected fiscal surplus will reach its highest level since the economic recession in 2013/14, reflective of stronger economic recovery and projected growth of 4.2% in the capital over 2014. London’s surplus has steadily increased since the recession, rising from £11bn during 2009/10 to £28bn in 2012/13. London has consistently provided a higher fiscal contribution than any other region since 2006/7, reflective of its role as the UK’s major financial and business centre.
The report finds that London delivers a strong rate of return on investment for the UK economy. While accounting for an estimated £93bn share of public expenditure during 2013/14, reflecting investment in key infrastructure projects to maintain London’s competitiveness such as Crossrail, London generated an estimated £127bn of tax revenues for the exchequer. The methodology used adopts a new approach, allocating output and each element of tax revenue to where the associated economic activity takes place, with the results demonstrating London’s buoyant business growth and concentration of employment at almost 5 million.
Westminster and the City of London are the two districts with the greatest economic output, which together produce a fiscal surplus of £23.8bn, reflective of their roles as the areas with the highest employment in Central London, estimated at 695,100 and 393,600 respectively for 2014. The other six central London boroughs also generated a significant surplus in 2013/14, showing that London’s strength is spread across its central region as the boroughs work together to maintain London’s economic momentum.
Discussing the report, City of London Policy Chairman Mark Boleat said: “London’s outstanding economic performance is a testimony to the people and businesses of London. Clustering business together in the centre creates an environment primed for economic growth – but this cannot work without out symbiotic relationship between all London boroughs. London works as a whole to complement the strengths of the other UK regions, and this report shows that it will continue to do so for years to come, supporting the UK’s wider economy and driving the recovery forward.”
Charles Davis, Director at Cebr, added: “The UK economy is recovering but there is still a lot to do. This report shows that London is playing a major role in to reducing the budget deficit. While it is true that London is benefitting from major infrastructure investment, this research clearly illustrates that the capital makes a major contribution to government finances, supporting wider investment and expenditure across the rest of the UK. With London’s ability to reinvent itself, for example, becoming the UK’s major hub for tech start-ups this major contribution is expected to grow further as the UK attempts to significantly reduce the deficit over the coming Parliament.”
The report examines the UK’s public finances on a regional basis over the past ten years, looking at London’s taxes and revenues, and projects London and the UK’s economic performance to 2034/5 to estimate London’s contribution to the public purse over the next ten years.
Notes to editors
Bella Longman, Media Officer, City of London Corporation
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About the City of London Corporation
The City of London Corporation provides local government and policing services for the financial and commercial heart of Britain, the 'Square Mile'. In addition, the City Corporation has three roles: (1) we support London’s communities by working in partnership with neighbouring boroughs on economic regeneration, education and skills projects. In addition, the City of London Corporation’s charity City Bridge Trust makes grants of more than £15 million annually to charitable projects across London and we also support education with three independent schools, three City Academies, a primary school and the world-renowned Guildhall School of Music and Drama. (2) We also help look after key London heritage and green spaces including Tower Bridge, Museum of London, Barbican Arts Centre, City gardens, Hampstead Heath, Epping Forest, Burnham Beeches, and important ‘commons’ in south London. (3) And we also support and promote the ‘City’ as a world-leading financial and business hub, with outward and inward business delegations, high-profile civic events, research-driven policies all reflecting a long-term approach. See www.cityoflondon.gov.uk for more details.
Cebr – the Centre for Economics and Business Research – is one of the leading economics consultancies based in the UK. We were established in 1993 by former IBM & CBI Chief Economic Adviser Douglas McWilliams. Cebr provides specialist economic advice to private and public sector organisations around the world. Our history dates back to the early 1990s where our first projects included influential analysis of the Jubilee London Underground line extension and research on the economic impact of the proposed Crossrail railway line in London that is now being built. We have since worked with hundreds of organisations providing macroeconomic analysis, forecast, economic impact studies and original topical research for a wide range of clients. See www.cebr.com for more details.