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It is remarkably easy to think of London as its own financial bubble, a micro-economy, and a property market with its own rules and exceptions. The banking and financial centre of the UK, and the focus of UK and international investment, for obvious reasons the capital is usually examined on its own merits – often in contrast to the rest of the UK or the national economy as a whole.
However, a recent report, which takes figures spanning from 2008 to 2016, has indicated that the ‘ripple effect’ of London’s success is enormous. The research shows not the predictable financial effects felt in the south-east, but actually those encountered as far as Yorkshire and Humberside – and this is no minor influence: the in-depth report, produced by PwC on behalf of London First business group, shows that, annually, London construction projects are contributing as much as £57m and as many as 1450 jobs to the northern region.
How? It was found that the construction taking place in the capital relies heavily directly and indirectly on suppliers outside of London itself. £22m is paid in wages to 22,400 employees in Yorkshire and Humberside, who are associated in some way via supply chains with Central London developments. This is approaching double the number of jobs supported by development in the capital itself. PwC reports that while London benefits from £0.6bn annually from such development, the contribution to the regions is in fact around £1.1bn a year.
Ahmed Al-Ansari, of Morgan Pryce, comments: “This report demonstrates how complicated the UK economy is and the mutual reliance between the regions and the capital. Of course, the hope is that an increase in developments in London will give a much-needed boost to the entire country and the national economy – which in turn will lead to further investment. It is good to see that the results of investment in the capital are not limited to London itself and the immediate area.”
Nine of London’s principal developers took part in the research, but even this represents only a small proportion (10%) of the total London development. However, indications are that the results of the proportion examined are indeed representative of the whole, and not just for commercial property: residential property also appears to have a similar widespread effect.
Morgan Pryce is a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.