Economy of London facts for kids

Quick facts for kids
Economy of

London is the largest urban economy in Europe and, alongside New York, the city in the world most integrated with the global economy.
Statistics
Population	8,866,180 (2022)
GDP	£562.2 billion (2022)
GDP per capita	£63,407 (2022)
Labour force	4,726,000 / 74.4% in employment (Jan–Mar 2024)
Labour force by occupation	List 33.2% Professional 16.9% Associate professional 13.1% Managers, directors and senior officials 8.9% Administrative and secretarial 6.6% Elementary occupations 6.5% Caring, leisure and other service 6.0% Skilled trades 5.5% Sales and customer service 3.2% Process plant and machine operatives (Jan–Dec 2023)
Unemployment	228,000 / 4.6% (Jan–Mar 2024)
Average gross salary	£796.30 per week (2023)
External
Exports	£190.0 billion (2021)
Export goods	£37.8 billion (2021)
Imports	£138.5 billion (2021)
Import goods	£62.6 billion (2021)

The economy of London is mostly based on service industries. These are businesses that provide services, not physical products. Key services include financial services (like banking and insurance) and other professional services (like law or accounting). These services are connected to businesses across the United Kingdom and around the world. London is a major financial hub and a "command centre" for the global economy.

London is the biggest city in the UK by population. In 2011, it had the fifth largest economy among all cities worldwide. Some areas in London have a very high GVA (a measure of economic output) per person. London also creates a large amount of money, with a surplus that helps fund services in other parts of the UK.

London produces about 22% of the UK's total economic output, known as GDP. In 2013, there were 841,000 private businesses in London. This is more than in any other UK region. Many of these are small and medium-sized businesses.

What is London's GDP?

Gross Domestic Product (GDP) measures the total value of goods and services produced in an area. Greater London produced about £519.178 billion. This is roughly a quarter of the UK's total GDP.

Why are Services Important in London?

London's economy changed to focus on services earlier than many other European cities. This happened especially after the Second World War. Several reasons help London be a successful service industry and business hub:

• Language: English is the main language spoken. It is also the most common language for international business.
• History: London was once the capital of the British Empire. This created many global connections.
• Location: London is in Europe. This central time zone allows it to connect business hours between the US and Asian markets.
• Global Connections: The UK has strong relationships with the United States and many countries in Asia, Africa, and the Middle East. Many of these are part of the Commonwealth of Nations.
• Legal System: English contract law is very important and widely used in international business.
• Business-Friendly: London has a good environment for businesses. For example, taxes can be lower for companies and some foreign individuals.
• Transport: London has excellent transport, especially its airports.
• Quality of Life: Many people find London a great place to live.

Today, over 85% of people working in Greater London are in service industries. This is about 3.2 million people. Another half a million work in manufacturing and construction.

Where are London's Business Districts?

London has five main business areas. These are the City, Westminster, Canary Wharf, Camden & Islington, and Lambeth & Southwark. You can see how important they are by looking at the amount of office space they have. In 2001, Greater London had over 26 million square meters of office space.

Waterside, the main office of British Airways in the Borough of Hillingdon

The cost of renting office space shows where the most valuable businesses are. Mayfair and St. James's are the most expensive areas. Newer areas like East London Tech City, also called Silicon Roundabout, are growing hubs for technology companies.

Big Companies in London

The London Stock Exchange is a very important stock market. It is the largest in Europe and attracts many international companies. More than half of the top 100 companies listed on the London Stock Exchange (the FTSE 100) have their main offices in central London. Also, over 70% of these companies are located within London's wider metropolitan area. Many of the world's largest companies, like those on the Fortune 500 list, have offices in London. London is known for having a very diverse group of business leaders from all over the world.

Financial Services in London

Finance is London's biggest industry. It is the largest exporter of financial services in the world. This means it brings a lot of money into the UK. In 2017, London was ranked as the most competitive financial center globally. However, in 2018 and 2020, New York City took the top spot.

The City of London is home to many important financial businesses. These include exchanges, banks, investment managers, pension funds, and insurance companies. London is a key place where international financial businesses come to work together. It is also home to the Bank of England, which is the UK's central bank. Other important places include Lloyd's of London for insurance and the Baltic Exchange for shipping.

A second financial area has grown in Canary Wharf. Here you can find the main offices of big banks like HSBC and Barclays. The global news service Reuters also has its headquarters there. London handles a huge amount of global currency transactions. In 2009, it handled 36.7% of all global currency deals each day. More US dollars are traded in London than in New York. Also, more Euros are traded in London than in all other European cities combined. London is a top place for international bank lending, derivatives markets, and trading in gold, silver, and other metals.

London's financial services benefited from the UK being part of the European Union (EU). Even after the UK left the EU in 2021 (Brexit), London has mostly kept its strong position as an international financial center.

BT Centre, the headquarters of BT Group, in the City of London

Professional Services in London

London is a major global hub for professional services. These are services provided by experts, like lawyers, accountants, and consultants. Many of the world's largest accounting firms and management consulting firms are based in London. It is also a leading international center for legal services, with four of the world's six largest law firms headquartered there.

Media Industry in London

Many media companies are located in London. The media distribution industry is London's second most competitive sector. The BBC is a very large employer in the city. Other broadcasters also have their main offices in London. Many national newspapers are edited in London. Historically, this was on Fleet Street, but now they are spread across the city. Soho is a center for the film and TV post-production industry. London also has strong links with Hollywood, which brings billions of pounds into the economy.

Tourism in London

Tourism is one of London's most important industries. London is one of the most visited cities in the world by international tourists. It attracts millions of visitors each year. Within the UK, London is home to the ten most-visited tourist attractions. In 2003, tourism provided jobs for about 350,000 full-time workers in London. Tourists spend around £15 billion each year in the city.

Technology in London

More and more technology companies are setting up in London. A key area for this is East London Tech City, also known as Silicon Roundabout. Investment in London's technology sector has grown a lot. London has been called the fastest-growing technology hub in Europe. It has over 100 unique tech companies valued at $1 billion or more.

Retail and Fashion in London

London is a big shopping center. In 2010, it had the highest sales of non-food items of any city in the world. People spent around £64.2 billion. The UK's fashion industry is centered in London. It also adds tens of billions of pounds to the economy.

Manufacturing and Construction

For a long time, London was a major manufacturing center. In 1960, over 1.5 million people worked in factories. However, manufacturing declined sharply from the 1960s onwards. Many industries disappeared, like shipbuilding and most vehicle manufacturing.

Manufacturing Today

One large factory still operating is Ford Dagenham. It is the biggest diesel engine manufacturing site in the world. Some food and drink manufacturing still happens in London. For example, baking at Warburtons in Brimsdown, biscuits at United Biscuits in Harlesden, and brewing at Fuller's Brewery in Chiswick. London has the lowest percentage of workers in the UK who are involved in manufacturing.

Construction in London

London was named the best city for real estate investment by foreign investors in 2014. Building new offices was at a four-year high in 2013.

A huge 10-year construction project is happening in Nine Elms on the South Bank of the River Thames. This project is turning an old industrial area into a modern place with homes and businesses. It includes fixing up Battersea Power Station and building new embassies for the United States and the Netherlands. There are also plans for new transport links, like two new tube stations. This project is expected to create about 25,000 permanent jobs and 16,000 new homes.

Other big construction projects include Kings Cross Central and Paddington Waterside. The government has also approved plans for new housing zones across London. These will create 28,000 new homes by 2025.

Education in London

London is a leading global center for education. It has one of the largest numbers of international students of any city. The University of London is a huge university system with over 120,000 students. It includes many well-known colleges like University College London, King's College London, and the London School of Economics and Political Science.

Several London universities, such as Imperial College London, King's College London, LSE, and UCL, are top research centers. They are known worldwide for their quality. Many important scientific and academic groups are also based in London. London is also Europe's top center for arts education.

Transport in London

Transportation plays a big part in London's economy, both in services and construction.

Public Transport

London has a connected public transport system run by Transport for London. It uses a single electronic ticket, the Oyster card. The system worked well during the 2012 Summer Olympics. It includes the London Underground (the Tube), London Overground, Docklands Light Railway, London Buses, and London River Services. There are also 18 main railway stations that connect London to other parts of the UK. High-speed trains like Eurostar connect London to Paris, Brussels, and Amsterdam.

Crossrail is a new railway line that opened in 2022. It runs across London from east to west and out into the countryside. It was Europe's biggest construction project, costing £15 billion. Another line, Crossrail 2, has been suggested for the future.

Roads in London

Many streets in central London were built before cars existed. Because of this, London's roads are often very busy. There is a daily charge to drive in Central London called the congestion charge. There is also an Ultra Low Emission Zone (ULEZ) charge for older, more polluting vehicles.

London's Airports

London is served by six international airports. These airports make up the busiest city airport system in the world by passenger numbers. They are Heathrow, Gatwick, Stansted, Luton, London City, and Southend.

There are plans to expand London's airport capacity, especially at Heathrow and Gatwick. The main reason for expanding airports is to help the UK's economy grow. This is done by providing international flight connections to fast-growing countries. The Heathrow expansion, for example, is expected to create 120,000 new jobs and bring over £100 billion in economic benefits. It also aims to boost exports.

Ports in London

The Port of London was once the largest port in the world. Today, it is the second-largest in the UK. It handles 48 million tonnes of cargo each year. The port is not in one single place. It stretches along the tidal Thames, including central London. Over time, most port activities have moved further downstream towards the sea. This is because ships have become larger, and city areas closer to the center are used for other things. Today, much of the cargo for the Port of London goes through the Port of Tilbury, which is outside Greater London.

London Gateway, the UK's newest container port, opened in 2013. This large facility is located about 20 miles down the River Thames from London. It is expected to handle 3.5 million containers each year. This development is predicted to create 27,000 jobs in London and the South East. It is also expected to add £2.4 billion a year to the economy.

Images for kids

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  Canary Wharf, a major business district in London.

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  The City of London, a historic financial hub.

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  Tower Bridge and The Shard, showing London's mix of old and new.

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  The Elizabeth line, a new railway connecting parts of London.