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1
The Frank Carter Lecture 2011
The past and future of the London economy
Peter Wood
4
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)
5
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.
7
Publishing, advertising, fashion, design, architecture, TV, film and radio, fine arts,
entertainment , sport, software design and media skills.
9
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
10
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
11
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)
12
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
13
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
15
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
20
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
21
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
24
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