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The Frank Carter Lecture 2011

The past and future of the London economy

Peter Wood

p.wood@geog.ucl.ac.uk

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37 Years of Greater London Employment: ‘000s

1971 1991 2002 2008

Manufacturing: 950 358 236 178

Constr/util/tpt-comm: 650 450 448 437

Services: c.2,000 c.2,500 3,231 3,553

TOTAL: 3,900 3,300 3,921 4,169

(Note: Manufacturing in London: Post-war Peak of 1.6 million workers)

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The ‘New’ City of London, 1986-2006

1980s: 'Bowler hats and furled umbrellas', replaced by

double breasted suit and the Filofax' (Budd and Whimster,

1992)

Basis of expansion:

1970s: i) Expansion of foreign exchange markets

ii) Development of 'Eurodollar' market

iii) Recycling of 'petrodollars‘

1980s: i) Political environment

ii) Deregulation (‘Big Bang’, 1986)

iii) Electronic trading

iv) Growth of 'securitization' to by-pass

traditional banking and equities markets.

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Publishing, advertising, fashion, design, architecture, TV, film and radio, fine arts,

entertainment , sport, software design and media skills.

8 London lagging ------ London leading

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London GVA share, by sector, 1998-2008

0%

20%

40%

60%

80%

100%

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Other Community, Social and Personal Service

Activities

Public admin., Education, Health

Business Services, Real Estate,

Financial Intermediation

Transport, Storage and Communication

Hotels and Restaurants

Wholesale and Retail Trade;

Construction

Electricity, Gas and Water Supply

Manufacturing

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Central London's employment functions, % share compared with outer London and

Great Britain, 2009

0 5 10 15 20 25 30 35 40 45

1: As a consumer centre

2: As a financial centre

3: As a business service centre

4: As an administrative centre

5: As a manufacturing centre

6: The transport of goods and people

6: Construction, repair, utilities

7: Public services

Central London Outer London GB

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KIBS include:

FINANCIAL:

Financial intermediation, insurance and auxiliary services, (SIC 65-67)

PROFESSIONAL:

Property development and management (7011;7032)

Legal (7411)

Accounting (7412)

BUSINESS:

Computer consultancy and database (721-4)

Market research (7413)

Business consultancy (7414)

Architectural and engineering (742)

Technical testing (743)

Advertising (744)

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Total financial, professional and business services, 1998-00-03-06

0

100

200

300

400

500

600

700

Cen

tral

London

Core

citi

es

Man

ches

ter

Birm

ingham

Leeds

Liver

pool

Sheffie

ld

New

cast

le

Notti

ngham

Brist

ol

Em

plo

ym

en

t, t

ho

usa

nd

s

1998

2000

2003

2006

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Senior managerial employment in financial and business services compared with

'expected' from regional share of financial and business service employment

-20,000

-10,000

0

10,000

20,000

30,000

40,000

50,000

North E

ast

North W

est

York

shire an

d T

he Hum

ber

Eas

t Mid

lands

Wes

t Mid

lands

Eas

t of E

ngland

Lond

on

South

Eas

t

South

Wes

t

Sco

tlan

d

Wales

De

via

tio

ns

fro

m 'e

xp

ec

ted

'.

Finance

Bus Sers

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Source: Jon Reades, CASA

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Manufacturing Engineering Other KIBS

Retail/ Distribution

Innovation active Of which:

73 70 69 52

Product innovator 38 34 37 22

Goods 35 30 18 15

Services 16 14 31 14

Process innovator 24 24 28 10

Innovation-related expenditure

72 68 66 46

Wider innovation

40 37 47 29

Either product or process innovation

44 40 47 25

Table 1a: Innovation indicators: Percentage of all UK enterprises (Bold = highest)

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Financial and business services and goods: UK balance of payments, £bn,

1999 and 2009.

-100 -80 -60 -40 -20 0 20 40 60

Exports

Imports

Exports

Imports

Goods

Finance and Insurance

Other

business/information

Fin

an

ce

an

d

Ins

ura

nc

e

Oth

er

bu

sin

es

s/in

form

ati

on

Ba

lan

ce

1999 2009

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What makes London KIBS innovative?

1. Great variety of knowledge-based business, professional, financial,

scientific and creative expertise.

2. Supporting clients’ non-technological + technological adaptation to

changing markets, new technologies, cost pressures, etc.

3. Demanding and innovative international and national clients.

4. Ease of remote and face to face interaction between:

5. Competing and collaborating large and small firms, often working in

project-directed groups for clients.

6. Ability to support international cooperation and exchange, (e.g. for

MNCs, overseas clients (e.g. financial, technological, human resource

development)

7. Critical significance of geography, even within central London

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Central London KIBS Employment Trends, 2000-2008

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

2000 2003 2006 2008 2000 2003 2006 2008 2000 2003 2006 2008

City Tower Hamlets Rest of central London

Finance Professional Business

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Source: Duncan Smith, CASA.

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GLA employment projections, 2005-2031, assuming 2.5%p.a. output growth, thousands

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

Business services

Health and Education

Wholesale & retail

Hotels & restaurants

Transport and comms

Financial. Services

Public admin

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UK Employment change (seasonally adjusted) June 2006-08-10

- 5 0 0 - 4 0 0 - 3 0 0 - 2 0 0 - 10 0 0 10 0 2 0 0 3 0 0

A : A g r i c u l t u r e , e t c .

B : M i n i n g

C : M a n u f a c t u r i n g

D : E n e r g y u t i l i t i e s

E : W a t e r s u p p l y ; e t c .

F : C o n s t r u c t i o n

G : W h o l e s a l e / r e t a i l

H : T r a n s p o r t a t i o n

I : A c c o mmo d a t i o n a n d f o o d

J : C o mmu n i c a t i o n s

K : F i n a n c i a l

L : R e a l e s t a t e

M : P r o f e s s i o n a l , s c i e n t i f i c

N : A d mi n i s t r a t i v e a c t i i v i t i e s

O : P u b l i c a d mi n a n d d e f e n c e

P : E d u c a t i o n

Q : H e a l t h a n d s o c i a l w o r k

R : A r t s , e n t e r t a i n me n t

S : O t h e r s e r v i c e a c t i v i t i e s

T h o u s a n d s

0 6 - 0 8 0 8 - 10

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London KIBS 2008: Numbers of establishments by size group

0

5

10

15

20

25

30

1-10 11-49 50-199 200+

Th

ou

san

ds

Employment size group

No

. o

f e

stab

lish

men

ts

62 : Computer

63 : Information services

64 : Financial services

65 : Insurance

66 : Auxiliary to finance

68 : Real estate

69 : Legal and accounting

70 : Management consultancy

71 : Architectural and engineering

72 : Scientific R&D

73 : Advertising - market research

74 : Other prof., sci & technical

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