London generates roughly a quarter of the UK’s economic output and just under a fifth of its workforce jobs – making the capital's economic performance central to national living standards, as well as to Londoners' own. This chapter examines how London's economy is currently performing, the quality of work available to those who live here, and the drivers and distributional patterns that shape whether growth is broadly shared.
Economic growth and income inequality
This section examines economic growth in London, some of the key drivers of growth, and income inequality in the capital. More information on inequalities in London can also be found in the Social Justice chapter.
Post-pandemic recovery saw London's real gross value added (GVA) grow 7.7% in 2021 and 8.1% in 2022, but growth has since settled. The most recent ONS data release showed London’s real GVA grew by only 0.3% in 2023 (compared to 0.4% for the UK as a whole). Estimates by GLA Economics suggest a modest strengthening of economic growth in London over the last two years, with real GVA expected to have risen by 1.1% in 2024 and 1.9% in 2025.
Historically, economic growth in London has tended to outperform the UK’s, reflecting its position as the country’s economic engine. In recent years, however, this advantage has narrowed. London’s cumulative recovery from the pandemic has lagged behind that of the UK overall. GVA in 2025 was estimated to be 5.1% above its pre‑pandemic 2019 level, compared with 5.9% for the UK as a whole.
This weaker relative performance largely reflects the severity of London's pandemic shock. The city was hit harder due to its concentration of sectors most exposed to lockdowns and mobility restrictions, such as hospitality, retail, tourism, and other face‑to‑face services, as well as its greater reliance on international travel and commuting. The subsequent rebound in 2021 and 2022 when real GVA increased by 7.9% and 8.1% respectively, though stronger than the UK average, reflected recovery from a deeper contraction rather than a sustained acceleration.
Productivity, measured here by real output per hour worked, is a key driver of economic growth. Productivity growth is what allows real wages and living standards to rise over time, without an increase in hours worked.
ONS data shows a general flatlining of productivity in London in the decade following the 2008 financial crisis - with weak business investment and slower growth in high-productivity sectors weighing on overall productivity growth. These are features of the broader UK productivity puzzle - which has been especially pronounced in London, given its concentration of businesses in finance, professional services, and other high-productivity knowledge-intensive industries. The pandemic and subsequent shift to hybrid working have added further pressures - but the underlying slowdown is longer-standing.
Despite relatively weak productivity growth, London remains the most productive region in the country. GVA per hour worked (in 2023 prices) was £57 per hour in 2023 (the latest available data), around 29% higher than the UK average of £44 per hour.
It should also be noted that while London's productivity growth appears to be weak by historical standards according to the data, a combination of methodological challenges faced by the ONS and a lag in data availability means the more recent data should be treated with caution.
While London’s economy has bounced back from the pandemic, the recovery has been uneven across sectors. Between 2019 and 2023, output in the information and communication sector grew by over 15%, while professional and technical services and education expanded by nearly 10% and 11% respectively. Financial and insurance activities also posted positive growth, albeit more modestly. These sectoral growth patterns have reinforced the city’s strengths in knowledge-intensive sectors.
In contrast, sectors dependent on physical interaction have seen weaker recoveries. Output in the transport and storage sector remains nearly 20% below its 2019 level - the largest decline among all industries. Accommodation and food services, as well as arts and entertainment also remain below pre-pandemic levels, reflecting behavioural shifts into increased hybrid working (reducing weekday footfall). Health and social work output is also below its 2019 level, in part due to social-care staffing shortages. In non-service sectors, construction output remains nearly 11% lower than in 2019, while manufacturing has increased slightly by 1.4%.
These figures draw on the latest available ONS data until 2023. Estimates for 2024 are due from the ONS in July 2026 and an updated assessment of London's sectoral picture will be carried out in a forthcoming edition of London's Economy Today (LET).
Consumer confidence and business sentiment indicators for London have been mostly positive over the past year. Consumer confidence has been positive almost continuously since early 2024, with business activity and new orders pointing to ongoing expansion - a marked improvement on post-pandemic volatility. A brief dip in mid-2025 coincided with the employer National Insurance rise and renewed global trade tensions, but sentiment has since recovered.
Consumer confidence in London was mostly negative following the pandemic, reaching a low of –30 in September 2022 (during the mini-Budget). It fluctuated between 2022 and early 2024 but has risen steadily since – reaching +15 in February 2026. By contrast, UK-wide consumer confidence has remained weak, sitting at -19 in the same month. The national measure has not recorded a positive reading since 2016.
Business sentiment in London has been more stable. Bar a two-month dip in April-May 2025, both business sentiment indices have been positive since early 2023, with Business Activity at +7.8 and New Business at +6 in February 2026, signalling near-continuous expansion and a clear recovery from the late-2022 contraction. London has consistently run ahead of the UK as a whole, where business sentiment has been more subdued.
The number of business births in London has historically exceeded the number of closures1 , reflecting the capital’s economic dynamism. However, from mid-2021 (following the pandemic), business births began to decline while closures steadily rose. By early 2022, closures surpassed births (on a four-quarter rolling basis), marking a reversal of the long-standing trend.
This situation was short-lived. The gap narrowed over 2023, and by the end of the year, business births once again exceeded closures. A similar trend was observed across the UK, although the recovery lagged behind London’s.
Throughout 2024 and 2025, business births in London were above closures, suggesting that business dynamism in London continues to regain momentum.
London’s economy supports many high paid jobs. However, there is a stark gap between the incomes of the richest and poorest households. The latest DWP data indicate that the richest tenth of Londoners earn around 11 times the income of the poorest tenth (when looking at a three-year average of 2021/22 – 2023/24 data).
Incomes for the lowest tenth of earners in London are 39% lower than the lowest tenth of earners in the rest of the UK, while incomes for the highest tenth are 36% higher. This translates to a 90:10 ratio (a measure of inequality that looks at the ratio of income between highest and lowest tenth of earners) of 11 for London. This figure increased from 9 in the previous year (when looking at a three-year average of 2020/21 – 2022/23) and is more than twice that of the rest of the UK (4.8).
Median equivalised income after housing costs for a household in London is approximately £632 per week, 10% higher than it is for a household in the rest of the UK where it is £574 per week.
Access to good work
Another important economic outcome is whether Londoners can access employment, and whether that work offers fair pay and conditions, opportunities for progression and positive relationships between workers and employers. This section examines data related to London’s labour market covering the employment rate, involuntary worklessness, and job quality.
The employment rate is the proportion of people aged between 16 and 64 years who are in employment. Data for this indicator comes from the ONS Labour Force Survey, which, due to data quality concerns, is currently badged as an “Official Statistic in Development” indicating that it should be used with caution.
For the three-month period between December 2025 and February 2026, London’s employment rate was estimated at 74.3%. This represents an increase of 0.4 percentage points (pp) compared to the same period in the previous year and is 0.7 pp below the current UK rate of 75%.
The margin of error for the latest London employment rate is ±1.4%, which suggests that the oscillations over the last two years between around 74% to around 76% do not reflect a real change in the underlying trend.
Taken together with employment data from alternative sources — one based on employer surveys and one on HMRC Pay-As-You-Earn (PAYE) data — the overall picture is of a softening labour market over 2025. For more information see the latest GLA Economics Labour Market Monthly Update.
This indicator shows the share of the 16-64 year-old population that are unemployed or that are economically inactive but would like a job. Many people who are inactive do not want to work – for example, students, parents of young people, or those who have retired early. However, a substantial fraction say they would like a job – usually around one-fifth of the total number of economically inactive Londoners.
By adding these people to the number of unemployed, the indicator shows the share of 16–64 year-olds that would like, or need, to work but cannot find a suitable job.
In the year to the end of December 2025, there were 310,400 unemployed Londoners of working age and 282,600 economically inactive Londoners who said they would like a job, representing a total share of 9.5% of the working-age population. The total share has been increasing gradually since the record low of 7.0% in March 2023.
Since then, the proportion of the total made up by the unemployment component has increased relative to the inactivity component. With the official London unemployment rate having hit 7.4% in March 2026, this suggests that weaker demand in the labour market is the key contributor recently to involuntary worklessness in London.
The average job quality score summarises ONS Labour Force Survey responses across seven separate questions about whether employees:
report ‘good’ or ‘very good’ career progression opportunities.
report ‘good’ or ‘very good’ employee involvement.
have hourly pay greater than 60% of the local (regional) median.
have worked unpaid overtime.
report satisfactory hours.
report a zero hours contract.
report having desired contract.
Each item is scored as the share of employees answering the question with a positive response. For instance, if 20% of employees report having worked unpaid overtime, then we take the 80% that haven’t had to do so as the ‘positive’ score. Don’t knows and non-respondents are removed. The average job quality indicator is the mean value across all seven items. Data is currently only available for all seven indicators from 2020 to 2024.
Note that this is a series that remains in development. It provides equal weights to all components and does not prioritise particular attributes of ‘good work’, while attributes such as trade-union engagement and workplace wellbeing are not currently in-scope.
The average job quality score for employees in London was 78.2% in 2024, the highest since 2020, showing a slight increase from 77.6% in 2023 and 77.7% in 2022.
The score is lower for London than the UK, although the data show the gap narrowed over the 2022-2024 period. The largest contribution to the gap comes from the difference in the share of employees in (regional) low pay. In London in 2024, only 77.0% of employees earned more than the 60% of the regional median, while in the UK 85.1% earned more. This gap has narrowed from a 10 percentage-point (pp) difference in 2022 to 8.1 pp in 2024. Nevertheless, this suggests that while incomes may be higher in London, so is income inequality.
Londoners were also more likely to work unpaid overtime (only 77.1% in London did not versus 83.4% who did not in the UK) and less likely to report satisfactory hours (85.3% versus 89.0%). However, Londoners reported better scores for positive employee involvement (60.6% versus 55.9%) and career progression (51.9% versus 51.4%).
The 0.5 pp increase in London’s average score between 2022 and 2024 included a higher share of employees (+3.3 pp) earning above the 60% London median wage, alongside increases in the proportion of respondents reporting satisfactory hours (+1.1 pp), positive employee involvement (+0.7 pp), and desired contract (+0.6 pp). These gains were partially offset by a decline in positive career progression (-2.4 pp).
High streets and town centres
Many Londoners’ everyday experience of the economy is through their local high street or town centre. These locations provide access to services, employment and are important to the local community. This section provides a selection of indicators examining the health of London’s high streets and town centres, looking at footfall, expenditure and vacancy rates.
Footfall is a useful proxy for business and economic activity in high streets and town centres. By specifically looking at an area’s visitors (that is, not its workers or residents), these counts can help gauge retail activity (including shopping and dining). Footfall data are supplied by BT, which produces an estimate of workers, residents, and visitors for each high street and town centre based on a model of BT/EE mobile handset movements combined with census population estimates.
Overall, visitor footfall in 2025 increased in less than half of London’s high streets and town centres compared to 2024. Inner London fared moderately better than Outer London for both daytime (6AM-6PM; 48% vs. 32%) and nighttime (6PM-6AM; 34% vs. 23%) visitors. While the number of areas with increased year-on-year footfall has fallen from 2024 (when over 90% of areas showed growth), the actual change in footfall was very modest: the average change in visitors from 2024 to 2025 was –1.5% for Inner London and –5.5% for Outer London.
In-store spending data can be used to estimate the retail growth of London’s high streets and town centres. One measure is the total retail spend in an area, while a second measure is the total number of purchases made in that area. Retail spend data are supplied by Mastercard, reporting relative transaction amounts and counts occurring in its own network of debit and credit cards in physical shops. The data are further adjusted with a model to better estimate total retail spending on all merchant cards, as well as with cash.
Total retail spend in 2025 increased for about 40% of London’s high streets and town centres compared to 2024. More Inner-London high streets and town centres showed increased spend during daytime hours (46%) compared to Outer London (39%), while nighttime performance was more similar between Inner London (39%) and Outer London (37%).
Total purchases in 2025 increased for over half of London’s high streets and town centres compared to 2024. 63% of Outer-London and 59% of Inner-London retail areas showed a year-on-year increase in the number of purchases during the day; the percentage of Outer-London high streets and town centres with increased purchasing at night (59%) also slightly outpaced that seen for Inner-London areas (54%).
These data suggest that from 2024 to 2025, London’s high streets have entered a plateau of retail activity and visitor footfall after several years of post-COVID recovery.
The number of vacant storefronts can serve as an indicator of the overall health of a high street or town centre, with healthier high streets having fewer vacant shops. Premises-level data are supplied by Local Data Company, with the status of each location recorded as either vacant or occupied. Premises are assigned to high street and town centre boundaries, and the vacancy rate is reported as the percentage of all vacant premises out of total premises.
Across London as a whole, the average vacancy rate in a high street or town centre was 9.3% in 2025. Rates in Inner-London high streets and town centres were similar to the London-wide rate (at 9.7%), while Outer London high streets and town centres had a lower vacancy rate on average (8.4%).
In the rest of the UK, about one in ten shopfronts (10.3%) were vacant. The majority of both Inner London's (63%) and Outer London's (71%) high streets and town centres had vacancy rates below this 10.3% nationwide rate.