Newspaper article The Evening Standard (London, England)

London Pays the High Price of Success as It Lags on 'Good' Growth; Economic Analysis

Newspaper article The Evening Standard (London, England)

London Pays the High Price of Success as It Lags on 'Good' Growth; Economic Analysis

Article excerpt

Byline: Russell Lynch

ECONOMISTS bang on about growth almost all the time, but how often do they talk about "good" growth? Take gross domestic product, that oft-quoted but flawed measure of what our economy produces in a year.

Because it's based on money changing hands, there's a bunch of people who stay at home to look after a child or elderly relative, whom number-crunchers deem to be making no contribution to the national output. For example, if I cut my neighbour's lawn for nothing, I contribute nothing. But if I mugged somebody, I could claim to have "boosted" the economy because of all the money spent afterwards on hospital bills and lawyers.

The perils of that narrow fixation with GDP also goes for London; purely for output, the capital accounts for almost a quarter of the UK's overall growth. It's an economic colossus overshadowing the rest of the country. But on broader measures, London is falling short. A few years ago, PwC teamed up with the Demos think-tank to produce a "good growth" index for the UK's cities. It brings together 10 different elements, including housing, job security income levels, work-life balance, the quality of transport and the number of business start-ups.

Oxford and Reading top their Good Growth for Cities index, which spans 42 UK cities. But where does London come? Top five? Not even close. Our capital shuffles in at a lowly 15th.

It might be the world's premier financial centre, and a top destination for international capital, but on more rounded growth measures, London is actually bottom of the list out of all the cities covered on housing affordability, work-life balance, transport and owneroccupation. Those reading this after working late, waiting for a Circle line train that never comes before they head back to an expensively rented flat, may well nod in agreement.

And if you can actually get on the ladder, the Nationwide last week reminded us that the cost of servicing a typical mortgage in the capital for a first-time buyer is more than 60% of their take-home pay. It costs 12 times the average salary to buy.

Where London punches the lights out compared with the rest of country is on business start-ups, health, skills and income. …

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