London economy outperforms rest of UK ahead of General Election
London’s economy continued to outperform the rest of the UK in November, survey data has revealed, with the capital’s businesses enjoying a recovery in new orders as the rest of the country struggled.
New product releases, increased investment in marketing, and higher demand from US clients were some of the factors behind higher sales, according to Natwest and data firm IHS Markit, who produced the survey.
Read more: UK economy sent ‘staggering’ as services sector shrinks ahead of election
London’s moderate growth in output contrasted with the rest of the UK, where the private sector shrank last month as the General Election brought yet more political uncertainty to British firms.
The UK’s services, construction and manufacturing sectors all contracted in November, according to survey data released by IHS Markit, suggesting fourth quarter growth could be close to zero or even negative.
Yet the London business activity index rose to 51.8 in November from 51.7 a month earlier, Natwest said. A score of above 50 indicates expansion.
Stuart Johnstone, a managing director at Natwest, said: “The comparison with the rest of the country is striking.”
He said: “Despite the grip of political uncertainty affecting business volumes across most of
the nation, London companies have seemingly managed well, reporting continued inflows from domestic and foreign clients.”
Natwest said London firms became more positive in November, with optimism about the year ahead climbing to a four-month high.
Firms said the large spending promises from the main political parties ahead of the 12 December polling day could help sales rise next year.
Higher demand for their products also caused firms to take on new workers in November. This again contrasted with the nationwide picture, with the latest data showing a fall in employment.
Read more: EU finance chief warns UK to stay closely aligned post-Brexit
There are question marks over how healthy London’s economy will be next year, however, as the enormous financial services sector adapts to life outside the European Union and the government attempts to thrash out a free-trade agreement before 2021.
Last week, the EU’s finance commissioner told the Financial Times that the City could be cut off from continental markets after Brexit if the UK chose to “engage in some kind of deregulation”.