London's economy steams ahead of other English regions

London's economy expanded at a faster rate than any other English region in the third quarter of last year, according to the Office for National Statistics (ONS).

Compared with the other eight English regions, London showed the largest increase in growth in gross domestic product (GDP) in the three months ending September 2022.

Compared with the same quarter in 2021, London's GDP grew 6.7 per cent, followed by the North West with growth of 2.7 per cent. On a quarter-by-quarter basis, London's economy grew by 0.9 per cent.

London, the South West and the North East were the only three English regions to show positive economic growth on a quarterly basis in the third quarter last year. Of the rest, the worst performer was the East Midlands, with negative growth of 1.6 per cent, according to the ONS.

The numbers raise questions regrading the effectiveness of the government's levelling-up policy, designed to increase economic prosperity in areas outside London and the South East.

On an annualised basis, England, Scotland and Northern Ireland all show positive economic growth in the third quarter when compared with the same three months in 2021, of 2.5 per cent, 2.6 per cent and 0.8 per cent respectively.

However, the GDP of Wales for the same period shrunk by 2.1 per cent.

The ONS emphasised that the figures are estimates and part of an experimental statistical model that is still in development, and should be "interpreted with some caution".

'Clear vision'

Nonetheless, observers have pointed out that the government's levelling-up agenda, which the Conservative Party announced in its 2019 election manifesto, has been somewhat piecemeal so far, despite it being recognised as necessary by all the major UK political parties.

Prof Adrian Pabst, deputy director at the National Institute for Social and Economic Research believes radical action is needed for any levelling-up policy to become truly effective.

"How can we marry the scale of the task with ambitious, bold policy and institutional reform? Whether it's devolution of certain decision-making powers and resources, or something like a national development bank, or other institutional reform, I think that's the next thing for this agenda," he said.

"Not just to say, 'oh, we'll do a little bit of this and that'. No, we need to make sure that some bold things happen in the next few years, because we cannot wait for another generation.

"Otherwise, I think we have a lot more instability in store and frankly, I think this country needs anything but more instability. It needs a clear vision with a real economic industrial strategy that really covers the whole economy, and not just one sector in one part of the country."