Economy of London
Encyclopedia
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
is a major financial centre
Financial Centre
A financial centre is a global city that is a company and business hub, as well as being home to many world famous banks and/or stock exchanges....
for international business
International Business
International business is a term used to collectively describe all commercial transactions that take place between two or more regions, countries and nations beyond their political boundary...
and commerce and is one of three "command centres" for the global economy
International trade
International trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product...
(along with New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
and Tokyo
Tokyo
, ; officially , is one of the 47 prefectures of Japan. Tokyo is the capital of Japan, the center of the Greater Tokyo Area, and the largest metropolitan area of Japan. It is the seat of the Japanese government and the Imperial Palace, and the home of the Japanese Imperial Family...
).
London has the fifth largest city economy in the world, equally with Paris, after Tokyo
Tokyo
, ; officially , is one of the 47 prefectures of Japan. Tokyo is the capital of Japan, the center of the Greater Tokyo Area, and the largest metropolitan area of Japan. It is the seat of the Japanese government and the Imperial Palace, and the home of the Japanese Imperial Family...
, New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
, Los Angeles
Los Ángeles
Los Ángeles is the capital of the province of Biobío, in the commune of the same name, in Region VIII , in the center-south of Chile. It is located between the Laja and Biobío rivers. The population is 123,445 inhabitants...
and Chicago
Chicago
Chicago is the largest city in the US state of Illinois. With nearly 2.7 million residents, it is the most populous city in the Midwestern United States and the third most populous in the US, after New York City and Los Angeles...
and with a GDP of $565 billion in 2008.
Service industries
London shifted to a mostly service-based economy earlier than other European cities, particularly following the Second World War. London's success as a service industryTertiary sector of industry
The tertiary sector of the economy is one of the three economic sectors, the others being the secondary sector and the primary sector .The service sector consists of the "soft" parts of the economy, i.e...
and business centre can be attributed to a large array of factors:
- EnglishEnglish languageEnglish is a West Germanic language that arose in the Anglo-Saxon kingdoms of England and spread into what was to become south-east Scotland under the influence of the Anglian medieval kingdom of Northumbria...
being the native language and the dominant international language of business - its former position as the capital of the British EmpireBritish EmpireThe British Empire comprised the dominions, colonies, protectorates, mandates and other territories ruled or administered by the United Kingdom. It originated with the overseas colonies and trading posts established by England in the late 16th and early 17th centuries. At its height, it was the...
- its location within the European UnionEuropean UnionThe European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
- the special relationshipSpecial relationshipThe Special Relationship is a phrase used to describe the exceptionally close political, diplomatic, cultural, economic, military and historical relations between the United Kingdom and the United States, following its use in a 1946 speech by British statesman Winston Churchill...
between the United Kingdom and United States and the United Kingdom's close historical relationships with many countries in AsiaAsiaAsia is the world's largest and most populous continent, located primarily in the eastern and northern hemispheres. It covers 8.7% of the Earth's total surface area and with approximately 3.879 billion people, it hosts 60% of the world's current human population...
, AfricaAfricaAfrica is the world's second largest and second most populous continent, after Asia. At about 30.2 million km² including adjacent islands, it covers 6% of the Earth's total surface area and 20.4% of the total land area...
and the Middle EastMiddle EastThe Middle East is a region that encompasses Western Asia and Northern Africa. It is often used as a synonym for Near East, in opposition to Far East... - its location in a central time zone that allows it to act as a bridge between US and Asian markets
- English lawEnglish lawEnglish law is the legal system of England and Wales, and is the basis of common law legal systems used in most Commonwealth countries and the United States except Louisiana...
being the most important and most used contract lawContractA contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
in international business - relatively low taxes, particularly for foreigners - non-UK domiciled residents do not get taxed on their foreign earnings
- a business friendly environment (e.g. in the City of London the local government is not elected by the resident population but instead by business - the City of LondonCity of LondonThe City of London is a small area within Greater London, England. It is the historic core of London around which the modern conurbation grew and has held city status since time immemorial. The City’s boundaries have remained almost unchanged since the Middle Ages, and it is now only a tiny part of...
is a business democracy) - good transport infrastructure particularly its aviation industry
Currently, over 85% (3.2 million) of the employed population of greater London works in the service industries. Another half a million employees resident in Greater London work in manufacturing and construction, almost equally divided between both.
London has five major business districts: the City
City of London
The City of London is a small area within Greater London, England. It is the historic core of London around which the modern conurbation grew and has held city status since time immemorial. The City’s boundaries have remained almost unchanged since the Middle Ages, and it is now only a tiny part of...
, Westminster
City of Westminster
The City of Westminster is a London borough occupying much of the central area of London, England, including most of the West End. It is located to the west of and adjoining the ancient City of London, directly to the east of the Royal Borough of Kensington and Chelsea, and its southern boundary...
, Canary Wharf
Canary Wharf
Canary Wharf is a major business district located in London, United Kingdom. It is one of London's two main financial centres, alongside the traditional City of London, and contains many of the UK's tallest buildings, including the second-tallest , One Canada Square...
, Camden
London Borough of Camden
In 1801, the civil parishes that form the modern borough were already developed and had a total population of 96,795. This continued to rise swiftly throughout the 19th century, as the district became built up; reaching 270,197 in the middle of the century...
& Islington
Islington
Islington is a neighbourhood in Greater London, England and forms the central district of the London Borough of Islington. It is a district of Inner London, spanning from Islington High Street to Highbury Fields, encompassing the area around the busy Upper Street...
and Lambeth
Lambeth
Lambeth is a district of south London, England, and part of the London Borough of Lambeth. It is situated southeast of Charing Cross.-Toponymy:...
& Southwark
Southwark
Southwark is a district of south London, England, and the administrative headquarters of the London Borough of Southwark. Situated east of Charing Cross, it forms one of the oldest parts of London and fronts the River Thames to the north...
. One way to get an idea of their relative importance is to look at relative amounts of office space: Greater London had 26,721,000 m2 of office space in 2001.
| Business District | Office Space (m2) | Business Concentration |
|---|---|---|
| The City | 7,740,000 | finance, broking, insurance, legal |
| Westminster | 5,780,000 | head offices, real estate, private banking, hedge funds, government |
| Camden & Islington | |2,294,000 | |creative industries, finance, design, art, fashion, architecture |
| Canary Wharf | 2,120,000 | banking, media, legal |
| Lambeth & Southwark | 1,780,000 | accountancy, consultancy, local government |
Mayfair
Mayfair is an area of central London, within the City of Westminster.-History:Mayfair is named after the annual fortnight-long May Fair that took place on the site that is Shepherd Market today...
and St. James's
St. James's
St James's is an area of central London in the City of Westminster. It is bounded to the north by Piccadilly, to the west by Green Park, to the south by The Mall and St. James's Park and to the east by The Haymarket.-History:...
are currently the most expensive areas - approximately £93.00 per sq ft per annum.
London's largest industry remains finance, and its financial export
Financial export
A financial export is a business service provided by a domestic firm to a foreign firm within the scope of financial services...
s make it a large contributor to the UK's balance of payments
Balance of payments
Balance of payments accounts are an accounting record of all monetary transactions between a country and the rest of the world.These transactions include payments for the country's exports and imports of goods, services, financial capital, and financial transfers...
. The City is home to banks, brokers, insurers and legal and accounting firms. A second financial district has developed at Canary Wharf
Canary Wharf
Canary Wharf is a major business district located in London, United Kingdom. It is one of London's two main financial centres, alongside the traditional City of London, and contains many of the UK's tallest buildings, including the second-tallest , One Canada Square...
to the east of the City, which includes the global headquarters of two of the world's largest banks, HSBC
HSBC
HSBC Holdings plc is a global banking and financial services company headquartered in Canary Wharf, London, United Kingdom. it is the world's second-largest banking and financial services group and second-largest public company according to a composite measure by Forbes magazine...
and Barclays, the rest-of-the-world headquarters of Citigroup
Citigroup
Citigroup Inc. or Citi is an American multinational financial services corporation headquartered in Manhattan, New York City, New York, United States. Citigroup was formed from one of the world's largest mergers in history by combining the banking giant Citicorp and financial conglomerate...
and the headquarters of the global news service Reuters
Reuters
Reuters is a news agency headquartered in New York City. Until 2008 the Reuters news agency formed part of a British independent company, Reuters Group plc, which was also a provider of financial market data...
. London handled 31% of global currency
World currency
In the foreign exchange market and international finance, a world currency, supranational currency, or global currency refers to a currency in which the vast majority of international transactions take place and which serves as the world's primary reserve currency...
transactions — an average daily turnover of US$
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
753 billion — with more US dollars traded in London than New York, and more Euros traded than in every other city in Europe combined.
Fortune 500
The Fortune 500 is an annual list compiled and published by Fortune magazine that ranks the top 500 U.S. closely held and public corporations as ranked by their gross revenue after adjustments made by Fortune to exclude the impact of excise taxes companies collect. The list includes publicly and...
companies have offices in London. London is also the headquarters for four of the world's six largest law firms.
Along with professional services
Professional services
Professional services is an industry of infrequent, technical, or unique functions performed by independent contractors or by consultants whose occupation is the rendering of such services....
, media companies are concentrated in London (see Media in London
Media in London
London is a major international communications centre with a virtually unrivalled number of media outlets. Almost all of the major media organisations in the UK are based in London. Much of the British media is concentrated in London and is sometimes accused of having a "London bias"...
) and the media distribution industry is London's second most competitive sector. The BBC is a key employer, other broadcasters also have headquarters around the city. Many national newspapers are edited in London, having traditionally been associated with Fleet Street
Fleet Street
Fleet Street is a street in central London, United Kingdom, named after the River Fleet, a stream that now flows underground. It was the home of the British press until the 1980s...
in the City, they are now dispersed across the capital. Soho
Soho
Soho is an area of the City of Westminster and part of the West End of London. Long established as an entertainment district, for much of the 20th century Soho had a reputation for sex shops as well as night life and film industry. Since the early 1980s, the area has undergone considerable...
is the centre of London's post-production
Post-production
Post-production is part of filmmaking and the video production process. It occurs in the making of motion pictures, television programs, radio programs, advertising, audio recordings, photography, and digital art...
industry.
Tourism
Tourism in London
London is the world's leading tourism destination, and the city is home to an array of famous tourist attractions. London attracts 30 million international visitors per year, making it the world's most visited in terms of international visits. The Tourist Board for London is called Visit London...
is one of London's prime industries, and London is, by a considerable margin, the most visited city in the world by international tourists, with 15.6 million international visitors in 2006, ahead of second placed Bangkok (10.4 million international visitors) and third placed Paris (9.7 million). Tourism employed the equivalent of 350,000 full-time workers in London in 2003, whilst annual expenditure by tourists is around £15bn.
Transport
Once the largest port in the world, the Port of LondonPort of London
The Port of London lies along the banks of the River Thames from London, England to the North Sea. Once the largest port in the world, it is currently the United Kingdom's second largest port, after Grimsby & Immingham...
is today the second-largest in the United Kingdom, handling 48 million tonne
Tonne
The tonne, known as the metric ton in the US , often put pleonastically as "metric tonne" to avoid confusion with ton, is a metric system unit of mass equal to 1000 kilograms. The tonne is not an International System of Units unit, but is accepted for use with the SI...
s of cargo each year. Much of this passes through the Tilbury
Port of Tilbury
The Port of Tilbury is located on the River Thames at Tilbury in Essex, England. It is the principal port for London; as well as being the main United Kingdom port for handling the importation of paper. There are extensive facilities for containers, grain, and other bulk cargoes. There are also...
, outside the boundary of Greater London
Greater London
Greater London is the top-level administrative division of England covering London. It was created in 1965 and spans the City of London, including Middle Temple and Inner Temple, and the 32 London boroughs. This territory is coterminate with the London Government Office Region and the London...
.
Manufacturing and construction
For the 19th and much of the 20th centuries London was a major manufacturing centre (see Manufacturing in London), with over 1.5 million industrial workers in 1960. Manufacturing suffered dramatic decline from the 1960s on. Entire industries have been lost including shipbuilding (which ended in 1912 after hundreds of years with the closure of the Thames Ironworks and Shipbuilding Company
Thames Ironworks and Shipbuilding Company
The Thames Ironworks and Shipbuilding Company, Limited was a shipyard and iron works straddling the mouth of Bow Creek at its confluence with the River Thames, at Leamouth Wharf on the west side and at Canning Town on the east side...
), consumer electronics, aircraft manufacture and most of the vehicle construction industry. This trend continues, with the loss of the pharmaceutical manufacturing sites of Aesica (formerly Merck Sharp and Dohme) at Ponders End in 2011 and Sanofi-Aventis
Sanofi-Aventis
Sanofi S.A. is a multinational pharmaceutical company headquartered in Paris, France, the world's fourth-largest by prescription sales. Sanofi engages in the research and development, manufacturing and marketing of pharmaceutical products for sale principally in the prescription market, but the...
(originally May & Baker
May & Baker
May & Baker was a British chemical company.It was started by Mr. May and Mr. Baker in Wandsworth, London in 1851. They initially specialized in the manufacture of chemicals derived from Mercury and Bismuth...
) at Dagenham by 2013.
Today one of the last substantial industrial plants remaining is Ford Dagenham, a major producer of body panels and the largest diesel engine manufacturing site in the world. Food and drink manufacture remain in places, for example baking at Warburtons
Warburtons
Warburtons is a British baking firm based founded by Thomas Warburton in 1876 in Bolton, then in Lancashire, now in Greater Manchester, England. For much of its history Warburtons only had bakeries in Lancashire and it remains a family-owned company....
in Brimsdown
Brimsdown Industrial Estate
Brimsdown Industrial Estate is located to the east of the residential part of Brimsdown in the London Borough of Enfield. The estate, which lies in the Lea Valley, is bordered to the west by the West Anglia Main Line portion of the Lea Valley Lines and to the east by the River Lea and King George V...
, brewing at Fuller's Brewery in Chiswick
Chiswick
Chiswick is a large suburb of west London, England and part of the London Borough of Hounslow. It is located on a meander of the River Thames, west of Charing Cross and is one of 35 major centres identified in the London Plan. It was historically an ancient parish in the county of Middlesex, with...
, manufacture of coffee and chocolate by Nestlé
Nestlé
Nestlé S.A. is the world's largest food and nutrition company. Founded and headquartered in Vevey, Switzerland, Nestlé originated in a 1905 merger of the Anglo-Swiss Milk Company, established in 1867 by brothers George Page and Charles Page, and Farine Lactée Henri Nestlé, founded in 1866 by Henri...
in Hayes
Hayes, Hillingdon
Hayes is a town in the London Borough of Hillingdon, West London. It is a suburban development situated west of Charing Cross. Hayes was developed in the late 19th and 20th centuries as an industrial locality to which residential districts were later added in order to house factory workers...
, and refining of sugar and syrup by Tate & Lyle
Tate & Lyle
Tate & Lyle plc is a British-based multinational agribusiness. It is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index as of 20 June 2011...
in Silvertown
Silvertown
Silvertown is an industrialised district on the north bank of the Thames in the London Borough of Newham. It was named after Samuel Winkworth Silver's former rubber factory which opened in 1852, and is now dominated by the Tate & Lyle sugar refinery and the John Knight ABP animal rendering...
. At 2.8%, London was the region containing the lowest proportion of employees engaged in UK manufacturing.
See also
- Economy of the United KingdomEconomy of the United KingdomThe economy of the United Kingdom is the sixth-largest national economy in the world measured by nominal GDP and seventh-largest measured by purchasing power parity , and the third-largest in Europe measured by nominal GDP and second-largest measured by PPP...
- Agriculture in LondonAgriculture in LondonAgriculture in London is a rather small enterprise, with only 8.6% of the Greater London area being used for commercial farming, nearly all of which is close to Greater London's outer boundaries. There are a few city farms closer to the centre of the city and about 30,000 allotments. There are of...
- Economy of CroydonEconomy of CroydonCroydon, located in Greater London, England, has a diverse economy with the service and retail sectors now dominating over the town's historical market status...
- Economy of EuropeEconomy of EuropeThe economy of Europe comprises more than 731 million people in 48 different states. Like other continents, the wealth of Europe's states varies, although the poorest are well above the poorest states of other continents in terms of GDP and living standards. The difference in wealth across...