London has been holding back the UK’s productivity growth since the pandemic, new figures show, despite holding onto its position the country’s most productive region.
According to figures released by the Office for National Statistics (ONS), output per hour in London was 2.7 per cent lower in 2022 than it was in 2019, making it the only part of England to see negative productivity growth in the period.
In contrast, the North West has seen output per hour increase by 7.9 per cent since the pandemic while in Yorkshire productivity has grown by 6.4 per cent.
Source: ONS
Despite its poor performance since the pandemic, London remains the UK’s most productive region by a long way. Output per hour in London was 26.2 per cent higher than the UK average.
The South East was the only other region to see productivity levels outperform the national average, with output per hour 10.8 per cent above the national norm.
Wales, meanwhile, propped up the productivity table, with output per hour 17.3 per cent below the national average.
Broken down in more detail, the ONS showed that Tower Hamlets was the UK’s most productive area in 2022, with output per hour around 75 per cent higher than average.
Outside London, the strongest performer was North Hampshire, where productivity is around 54 per cent higher than the national average.
Although London maintained its position as the country’s most productive area, the productivity gap – the difference between London and the rest – is the smallest its been on record. Back in 2007, London was just under 40 per cent more productive than the average region.
Source: ONS
Productivity growth has slowed down dramatically around the world since the financial crisis, contributing to the sluggish recovery. If productivity had continuing growing at its pre-crisis trend, the economy would be about a third bigger.