According to research from Barclays
London has maintained its position as the UK’s centre of prosperity over the last year, according to the third edition of the annual UK Prosperity Map from Barclays Wealth & Investments.
Against a backdrop of fluctuating economic conditions and Brexit negotiations, the 2017 UK Prosperity Map shows that, despite rising prosperity, growth is slowing across a range of indicators compared to the rest of the UK, including house prices and GDP growth per capita.
The UK Prosperity Map uses factors including numbers of millionaires, average earnings, business growth rates, house prices, and GDP per capita to generate a unique ‘Prosperity Index Score’ for each UK region and city.
The UK’s biggest spenders
While London has the highest average earnings (£41,279) and highest household expenditure (£652 per week) in the UK, it has also seen the biggest growth in expenditure (5.9 per cent) over the last year. It continues to have the highest GDP per capita of the UK’s cities and regions at £43,629, but the city has seen only modest growth for this indicator over the last year compared to other regions. GDP per capita in London grew by 1.6 per cent compared with 3 per cent in the North West and 2.8 per cent in the North East.
Highest house prices continues but other cities rising faster
When it comes to house prices, almost every city has seen higher house price growth than London (up 3 per cent), with Birmingham (8 per cent) and Manchester (7 per cent) seeing the biggest increases. However, with an average of £502,787, London continues to have the UK’s highest house prices.
London remains the most attractive home for millionaires in the UK, with 165,000 living there – more than a quarter (26.4 per cent) of the UK’s total millionaire population. Although this is up by 6.5 per cent since last year’s research, London saw the third-lowest growth in numbers of millionaires compared with other regions, and a year-on-year drop of 0.3 per cent in its share of the overall UK millionaire population. The East Midlands and South West saw the highest percentage growth in their millionaire population between 2015 and 2016 (11.1 per cent and 10.5 per cent respectively).
Challenging environment for SMEs
While, at a regional level, London has the UK’s highest business birth-to-death ratio, with 1.78 new businesses created for every business “death”, the capital remains a challenging environment for SMEs. There has been a sharp decrease of 22 per cent in SME turnover since last year’s research according to Barclays Local Insights data. Only two regions in the UK (Scotland on 23 per cent and the North East on 26 per cent) have seen bigger decreases in SME turnover than London. This contrasts with a much brighter picture in some UK regions, such as the North West, where SMEs grew their turnover by 15 per cent.
Mark Smith, Regional Director, London region, Wealth & Investments, Barclays, said:
“This research shows that London maintains its position as a key driver of economic growth in the UK. With London seeing a slight decline in overall prosperity, and slower house price and GDP growth than other regions, it’s clear that there it is a mixed picture for the capital and that other cities in the UK are seeing more positive signs of growth”.