The Economic Outlook for London

The strength of London's economy has been very apparent over the past year, after a period when the potential for recovery was clear but there was less hard evidence. Financial services have clearly played a large part in driving the acceleration in London's growth, with stock markets, M&A activity and profitability all strong over the last 18 months. London's growth has also been bolstered by strong international immigration. Our latest forecasts show a modest slowdown in London's economy next year from a robust 3.9% in 2006, in response to higher UK interest rates and weaker growth in both the US and the Eurozone. But employment in London is still forecast to rise by 1.2% in 2007, with GDP expected to grow by 2.9% in London compared with 2.3% in the UK as whole.