London is outperforming the nationwide economy, suggesting the capital is on course to avoid what experts think will be a long recession in the UK, according to a new survey from Natwest.
An index of business output in London compiled by NatWest jumped to 50.2 last month, up from 48.2, meaning the capital’s economy is showing growth. At a UK level, activity contracted for the fifth month in a row, with the same index in December dropping below the 50-point threshold that separates growth and contraction.
The figures offer evidence suggesting that the London’s economy is resisting surging inflation and higher interest and is performing better against these challenges than the rest of the country. London Chamber of Commerce and Industry has suggested that around a quarter of the capital’s firms tried to take on more staff last quarter, the highest proportion since they started tracing the data.
The positive surveys suggest London will lead the UK back to economic strength if it does tip into what the Bank of England has forecast will be the longest recession in a decade. Data last week showed the UK economy unexpectedly grew 0.1 per cent in November, meaning the country may have narrowly avoided a recession last year.
Fintech entrepreneur Khalid Talukder, co-founder of DKK Partners said, “Whilst rising inflation and the cost-of-living crisis with make 2023 a challenging year, these figures show that London remains a powerhouse of innovation that can perform better than expected in tough times. The fintech industry already proved its resilience by bouncing back after Covid and will do so again in the face of economic hardship.”
Sir Howard Davies, a former deputy governor at the Bank of England and now chair of NatWest, told the BBC’s Sunday with Laura Kuenssberg programme yesterday he thinks the country is not currently in a recession. “The simplest thing to think about the economy is it’s flatlining at present,” Davies said.