Sunday 12 February 2012 11:27 pm
London gives 20 per cent of GDP to regions
ONE IN every five pounds earned in London goes to subsidise other regions in the UK, research from the Centre for Economics and Business Research (Cebr) revealed this morning. Tax receipts stand at 45.2 per cent of GDP in London and 41.1 per cent in the south east, but only 29.7 per cent in the north east and 27.7 per cent in Northern Ireland. Much of the 50p income tax’s impact comes in London, and the capital and south east also pay much of the total stamp duty for the country. Such large payments to the government mean London’s taxes exceed state spending by 10.3 per cent of its GDP.
In Northern Ireland, meanwhile, spending exceeds tax by 39.3 per cent of its GDP, while this “deficit” stands at 32.2 per cent in the north east.
After accounting for the UK’s total deficit, which the Cebr puts at 10 per cent, London provides a subsidy worth 20.3 per cent of its GDP, with Northern Ireland receiving a net subsidy of 29.4 per cent and Wales 26 per cent.
Meanwhile Scotland’s oil revenues and associated taxation exactly balance out increased government spending, meaning the country neither takes from nor contributes to the rest of the UK’s 10 per cent deficit.