London will have the fastest-growing economy of any developed country’s capital in Europe during the next five years, outstripping the city’s nearby rivals by a distance, according to research released by Oxford Economics yesterday.
Across the continent, only Sofia, Warsaw and Bucharest will accelerate more quickly than the British capital, with few cities in western and northern Europe coming even close.
The group says that London’s economy will expand by 3.3 per cent a year up to 2018, against just 2.7 per cent for the UK in general. The 0.6 percentage point gap between the local and national growth rates is the largest of any city in Europe other than Sofia, and equal only to Stockholm.
“The main reasons for London’s success are familiar: strength in investment banking and other forms of wholesale financial services, and also in professional, technical and scientific services,” said the authors.
London is also expected to soar ahead of Paris – the French capital is projected to grow by just 1.4 per cent on average. If the forecast comes through, London’s economy will expand by 10 per cent more than Paris’ by the end of the period.
The researchers expect that the capital will see robust employment growth, led by professional services. In inner London, office-based employment is expected to rise by 2.2 per cent per year on average between 2014 and 2018, the fastest of any European city.
“Indeed, in absolute terms the increase over the period is larger than the next three cities [Madrid, Milan and Warsaw] added together,” noted the researchers.
There are some positive suggestions in the research for countries on the edge of the continent which were hardest-hit by the Eurozone crisis.
The report suggests that Madrid will grow by 2.1 per cent over the five-year period, above the European city average of 1.9 per cent.