1. Economics
October 27, 2016

Even London's economy doesn't compare that well to similar European cities

By Jonn Elledge

The latest instalment of our weekly series, in which we use the Centre for Cities’ data tools to crunch some of the numbers on Britain’s cities.

You always knew we’d get there soon enough. In recent editions of this series we’ve compared the economy of Birmingham to that of similar cities. We’ve done the same for that of Liverpool. Both proved sadly lacking.

But sooner or later we were always going to look at the capital. And while much of the UK has fallen behind its European neighbours, that’s in part because our economy is so concentrated on the south east of England. So surely London will compare well to other major European cities? Surely?

Let’s find out.

Firstly, we should establish what European cities London is most like. It’s vastly bigger than every other European city except Paris (and, if we’re talking a wider definition of Europe, Istanbul and Moscow); it’s also on a level of international influence that almost no other city can compare with. (Most rankings of world cities place London and New York firmly at the top.)

But the Centre compares it to a number of fairly large, fairly economically vibrant European cities: Paris, of course, but also Amsterdam, Madrid, and, less predictably, Hamburg and Cologne.

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That’s not really about size…

…but more about industrial structure. These cities all have a lot of business services but relatively little manufacturing.

Note that London has a much smaller manufacturing sector than most of the ostensibly “similar” cities, and a bigger business services sector too. Already, the British capital is clearly an outlier.

So how does the city’s economy perform? Here, surprisingly, the city isn’t an outlier at all. In fact, it’s distressingly middle-of-the-pack.

London has a level of productivity, for example, that most British cities would kill for. But despite its status as playground of the mega-rich, it’s significantly less productive than Amsterdam or Paris:

It’s also logging patent applications at barely a third of the rate of Paris:

It’s looking mediocre on employment:

Correlation isn’t causation, but all this might have something to do with skills:

Anyway. I don’t wish to depress you too much, but as it turns out, it isn’t just outside London that Britain isn’t as rich as we’d like to tell ourselves. When compared to the cities with which it has most in common, the capital is under-performing, too.

You can find more cheerful figures on the Centre for Cities’ website here.

Jonn Elledge is the editor of CityMetric. He is on Twitter, far too much, as @jonnelledge.

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