Economy of London

The economy of London is dominated by service industries, particularly financial services and associated professional services, which have strong links with the economy in other parts of the United Kingdom (UK) and internationally. In addition to being the capital city of the United Kingdom, London is one of the world's leading financial centres for international business and commerce and is one of the "command centres" for the global economy.

London is the most populous region, urban zone and metropolitan area in the United Kingdom. London had the fifth largest metropolitan economy in the world in 2011 according to the Brookings Institution. Some of its neighbourhoods have estimated per capita GVA as high as £116,800 ($162,200). The London fiscal surplus, £32.5 billion in 2016–17, mostly goes towards funding services in other parts of the UK.

London generates approximately 22 per cent of the UK's GDP. 841,000 private sector businesses were based in London at the start of 2013, more than in any other region or country in the UK. 18 per cent are in the professional, scientific and technical activities sector while 15 per cent are in the construction sector. Many of these are small and medium-sized enterprises.

GDP

Greater London produced £503 billion while the economy of the London metropolitan area — the largest in Europe with Paris generates around 1/3 of the UK's GDP or around $1.0 trillion(in PPP).

Service industries

London shifted to a mostly service-based economy earlier than other European cities, particularly following the Second World War. A number of factors contribute to London's success as a service industry and business centre:

* English being the native language and the dominant international language of business;
* its past role as the capital of the former British Empire;
* its position in Europe, since Europe has a population larger than that of the US, and a central time zone that allows London to act as a bridge between US and Asian markets;
* the Special Relationship between the United Kingdom and United States, and the United Kingdom's close relationships with many countries in Asia, Africa and the Middle East, particularly those in the Commonwealth of Nations;
* English contract law being the most important and most used contract law in international business;
* a business friendly environment (e.g. relatively low taxes for corporations and non-domiciled foreign individuals; in the City of London the local government is not elected by the resident population but instead by resident businesses – the City of London is a business democracy);
* good transport infrastructure particularly its aviation industry;
* a high quality of life.

Currently, over 85% (3.2 million) of the employed population of greater London works in the service industries. Another half a million employees resident in Greater London work in manufacturing and construction, almost equally divided between both.

Business districts

London has five major business districts: the City, Westminster, Canary Wharf, Camden & Islington and Lambeth & Southwark. One way to get an idea of their relative importance is to look at relative amounts of office space: Greater London had 26,721,000 m² of office space in 2001.

A useful guide to the distribution of wealth across London is the cost of renting office space. Mayfair and St. James's are historically and currently the most expensive areas – approximately £146 per sq ft per annum. The least expensive commercial districts are Waterloo & Southwark and East London Tech City, a new, but growing hub of start up technology companies, also known as Silicon Roundabout – approximately £65 per sq ft per annum.

Domestic and international corporate headquarters

The London Stock Exchange is the most international stock exchange and the largest in Europe. More than half of the London Stock Exchange top 100 listed companies (the FTSE 100) and over 100 of Europe's 500 largest companies are headquartered in central London. Over 70% of the FTSE 100 are located within London's metropolitan area, and 75% of Fortune 500 companies have offices in London. According to research by Deloitte, "London has the most internationally diverse executive community in the world, attracting business leaders from 95 nationalities and with alumni working in 134 countries".

Financial services

London's largest industry remains finance, it is the largest financial exporter in the world which makes a significant contribution to the UK's balance of payments. In the 2017 Global Financial Centres Index, London was ranked as having the most competitive financial center in the world. However, in the 2018 ranking, London has lost that title to New York City. In the 2020 Global Financial Centers Index, London was ranked as having the second most competitive financial center in the world after New York City (alongside cities such as Shanghai, Tokyo, Hong Kong, Singapore, Beijing, San Francisco, Shenzhen and Zurich in the top 10). The City of London is home to exchanges, banks, brokers, investment managers, pension funds, hedge funds, private equity firms, insurance companies and reinsurance markets. London is notable as a centre of international finance where foreign participants in financial markets come to deal with one another. It is also home to the Bank of England, the second oldest central bank in the world, and the European Banking Authority, although the latter is moving to Paris in March 2019 following the Brexit referendum of 2016. Other key institutions are Lloyd's of London for insurance, the Baltic Exchange for shipping.

A second financial district has developed at Canary Wharf to the east of the City, which includes the global headquarters of two of the world's largest banks, HSBC and Barclays, the rest-of-the-world headquarters of Citigroup and the headquarters of the global news service Reuters. London handled 36.7% of global currency transactions – an average daily turnover of US$1.85 trillion – with more US dollars traded in London than New York, and more Euros traded than in every other city in Europe combined. London is the leading centre for international bank lending, derivatives markets, money markets, international insurance, trading in gold, silver and base metals through the London bullion market and London Metal Exchange, and issuance of international debt securities.

Financial services in London benefited from the UK's membership of the European Union, although this may end following the decision of the United Kingdom to leave the European Union.

The combination of lax regulation and London's financial institutions providing sophisticated methods to launder proceeds from criminal activity around the world, including those from drug trade, makes the City a global hub for illicit finance and London a safe haven for the world's malfeasants, according to research papers and reports published in the mid-2010s.

Professional services

London is a leading global centre for professional services. Many different types of professional service providers are located in the city including the big four accountants and major management consulting firms. London is the headquarters for four of the world's six largest law firms and is a leading international centre for legal services.

Media

Media companies are concentrated in London and the media distribution industry is London's second most competitive sector. The BBC
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