Economy of London

London,is a major financial centre for international business and commerce and is one of three "command centres" for the global economy (along with New York City and Tokyo).

London has the 5th largest city economy in the world after Tokyo, New York City, Los Angeles and Chicago, with a GDP of $565 billion in 2008.

Services industries

London shifted to a mostly service-based economy earlier than other European cities, particularly following the Second World War. London's relative success as a service industry and business centre can be attributed to a large array of factors:

English being the native language and the dominant international language of business

its former position as the capital of the British Empire

Bishopsgate, in the City of London.

its location within the European Union

the special relationship between the United Kingdom and United States and the United Kingdom's close historical relationships with many countries in Asia, Africa and the Middle East

its location in a central time zone that allows it to act as a bridge between US and Asian markets

English law being the most important and most used contract law 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 London 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 services 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, Westminster, Canary Wharf, Camden & Islington and Lambeth & Southwark. 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

Waterside, the headquarters of British Airways in the Borough of Hillingdon

A useful guide to the distribution of wealth across London is the cost of renting office space. Mayfair and St. James's are currently the most expensive areas - approximately £93.00 per sq ft per annum.

London's largest industry remains finance, and its financial exports make it a large contributor to the UK's balance of payments. The City is home to banks, brokers, insurers and legal and accounting firms. A second financial district has developed at Canary Wharf to the east of the City, which includes the global headquarters of two of the world's largest banks, HSBC and Barclays, the rest-of-the-world headquarters of Citigroup and the headquarters of the global news service Reuters. London handled 31% of global currency transactions in 2005 — an average daily turnover of US$753 billion — with more US dollars traded in London than New York, and more Euros traded than in every other city in Europe combined.

BT Centre, the headquarters of BT Group, in the City of London

More than half of the UK's top 100 listed companies (the FTSE 100) and over 100 of Europe's 500 largest companies are headquartered in central London. Over 70% of the FTSE 100 are located within London's metropolitan area, and 75% of Fortune 500 companies have offices in London. London is also the headquarters for four of the world's six largest law firms.

Along with professional services, media companies are concentrated in London (see Media in London) 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 in the City, they are now dispersed across the capital. Soho is the centre of London's post-production industry.

Tourism is one of London's prime industries, and London is, by a considerable margin, the most visited city in the world with 15.6 million visitors in 2006, ahead of 2nd placed Bangkok (10.4 million visitors) and 3rd 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

From being the largest port in the world, the Port of London is now only the second-largest in the United Kingdom, handling 50 million tonnes of cargo each year. Most of this actually passes through the Port of Tilbury, outside the boundary of Greater London.

Artist's impression of the London skyline in 2012

Manufacturing and construction

Another half a million employees resident in Greater London work in manufacturing and construction, almost equally divided between both.

At 6%, London was the region containing the lowest proportion of employees engaged in UK manufacturing.

(source:wikipedia)