London generates over a quarter of the UK's so-called economy taxes, and that could be a problem post-Brexit

 
Hayley Kirton
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The UK may need to be careful what it orders post-Brexit if London cannot pick up the tab (Source: Getty)

London is stumping up a substantial amount of the UK's taxes, and that could create issues for the country after Brexit, a report out today has found.

According to the figures from the Centre for Cities, in 2014-15, London shelled out 28.6 per cent of the UK's economy taxes, which the think tank defines as those which are dependant on economic growth, such as income tax, land and property taxes.

The capital also accounted for 43 per cent of economy taxes in UK cities over the last 10 years.

"The UK's growing reliance on London's taxes underlines the importance of ensuring that the capital prospers in a post-Brexit world," said Alexandra Jones, chief executive of Centre for Cities. "But our research also shows that more must be done in the years ahead to strengthen the economies and tax bases of other city regions such as Greater Manchester, the West Midlands and the North East, many of which voted strongly for Leave."

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Concerns have been raised following the Brexit vote that London could lose its standing as a financial hub if the UK fails to secure favourable conditions during the negotiations to leave the EU.

In particular, many are worried that the city could lose passporting rights, which would hinder the ability of London's financial services firms to do business in the EU member states.

Jones continued: "National and local leaders should work to secure access to the single market, which many firms depend upon. We also need to see assurances that investment for important infrastructure projects such as HS2 and HS3 will continue, and that the city-region devolution deals currently in place go ahead as planned in the coming years.

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"Boosting productivity in both London and major UK city regions will be vital in helping the country as a whole to grow and prosper in the years ahead."

Earlier this week, five business groups penned an open letter which called on government for more clarity on certain key points following the Brexit vote, including more information on whether major infrastructure projects would be going ahead as planned.

Commenting on the Centre for Cities report, Rain Newton-Smith, chief economist at the Confederation of British Industry, said: "There's much we need to do to address how different regions are sharing in the UK's prosperity, and part of the answer lies in improving connectivity between UK regions, which will help to boost growth and living standards in cities, towns and villages."

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