The Development of London's Economy

London has always been a commercial city and today enjoys the status of having one of the largest city economies in the world. The city thrives in trade and commerce and has a vibrant culture seeped in commerce. It has a GDP of over £565 billion, which is about 17 percent of the UK's total GDP. The size of its economy is larger than that of several European nations. The Port of London handles 48 million tonnes of cargo every year.

The nature of London's economy has undergone change over the years. While manufacturing industries held the dominant position during the nineteenth century and the early parts of the twentieth century, service industries, especially financial and business services are now the dominant sector. Of the total £37 billion annual export of goods and services, financial and business services account for about £15.5 billion.

London is the home to many banks and financial institutions and has the maximum number of foreign banks in any city. The city is also a major centre for forex trade. London trades more US dollars than New York does, and more Euros than all other cities in Europe combined.

The service sector employs 3.2 million people in London, which is about 85 percent of all jobs available in London's service industries. Out of this, the financial sector alone employs about 1.25 million people, or about one in every three jobs available. The manufacturing and construction industry, in contrast, employ half a million residents of Greater London, which is about 11 percent of the employable population of Greater London.

London is also a vibrant centre for arts and fashion, film, media, design, law and computing industries. E-commerce and related industries ranks amongst the fastest growing sectors in the city's economy. Tourism is another important sector with high growth potential.

London is today the centre of operations for almost two out of every three Fortune 500 companies and the European hub for one out of every three large global conglomerates. Several well-known businesses such as HSBC, Barclays Bank, Virgin, BBC and many others have their headquarters at London. The London Stock Exchange is the largest in the world, and accounts for about 32 percent of all global transactions.

The Future Plans

The London Plan encapsulates the blueprint for the development of London's economy. This plan aims to position London as the best city in the world and focuses on specific strategies and plans towards this end. The plan identifies growth sectors such as e-commerce, tourism and environmental industries and lays down sustainable and inclusive plans for the overall development of the economy.

E-Industry

The London plan recognises e-industry or internet based businesses as one of the fastest growing sector and with potential to offer much growth.

The Plan envisages an effective Information and Communications Technology (ICT) infrastructure and measures to support innovation, to promote creative and environmental industries.

Specific plans towards such a strategy include

  • Providing affordable broadband access for everyone in London.
  • Providing support measures to mitigate the social, economic, transport and environmental costs of e-infrastructure works such as ducting and installing wireless computing equipment.
  • E-enabling new residential and commercial developments. Specific measures of e-enabling include making provisions for ducts, incorporating fibre cables in the design and more.
  • Providing high quality yet affordable business premises and incubator units that promote business and increase synergy between business and research
Tourism

The London plan recognises tourism as a growth sector and aims to enhance London's image as an attractive tourism destination. The plan aims to maximise the opportunity provided by the 2012 Olympic Games through creating integrated and sustainable new products and destinations. The plan also pays attention to developing key infrastructure projects and supporting bids for other major international events.

Environmental Industries

Environmental industries are another key growth area for the future. The London plan envisages support in the form of funding, market development, promotions, land use policies and more to encourage such industries. It promotes the development of environmental friendly business clusters and targets sustainable methods such as recycling to process 85 per cent of London's waste within its boundaries to generate green business opportunities.

Such initiatives aim to develop London's economy and make it the world capital of business.