London developments contribute £12m annually to North East
A report has found that the North East is benefiting from construction work in London by £12m and 280 jobs a year.
The report, produced by PwC and commissioned by business group London First has found that construction work in central London is delivering a £12m annual dividend to the region .
Overall the capital contributes £1.1bn a year to regional economies across the UK and supports 22,400 jobs.
London itself benefits to the tune of £0.6bn annually and supports 12,200 jobs with 84% of the investment in Central London office development is spent in the UK, a higher figure than other industries.
Marcus Robinson, partner at PwC Newcastle said:“While it is no surprise that London benefits from office development, it is striking the further contribution to the regions is almost double with a significant part going to the North East.
“The region must now capitalise on these opportunities arising from London to ensure the long-term impact is felt resulting in employment opportunities, job security and a highly skilled workforce.”
The report was produced when London First asked PwC to analyse the direct and indirect impact of a sample of developments in central London that have been completed since 2008 or are expected to be completed by 2016.
Nine of the city’s principal developers agreed to take part in this work and allow access to their confidential proprietary data so that a full understanding of their construction expenditure, supply chain impacts and even employee spending could be developed.
The report also found that Central London office developments annually contribute £1.7bn of Gross Value Add (GVA, a measure of output like GDP) and 34,600 jobs to the UK economy.
More than half of this annual output is outside London – £1.1bn of GVA and 22,400 jobs per year, and around 84% of direct expenditure on central London office development remains in the UK economy.
The findings also showed the potential for developments to generate further economic benefits for the UK, by increasing capability in goods and services that the UK currently lacks, such as cladding, lifts and machinery.
The Central London office development covered by this study is equivalent to less than 10% of total London development, a sample of residential developments found that central London house building has similar multiplier impacts on the economy.
More than half of the products and services bought in the UK are sourced from suppliers outside London, with an estimated £7.7bn being spent in the regional supply chain between 2008 and 2016.
This is generating a total of around £9.7bn of GVA and 201,700 jobs in regions outside London between 2008-16.
Baroness Jo Valentine, chief executive of London First said:“The value of investment in London is huge in terms of generating jobs and economic benefits in London itself, but the knock-on contribution to regional economies is more impressive and shows the boost that London businesses provide to the rest of the UK.
“The fact that it can attract this private sector investment, against competition from other international hubs such as New York or Dubai, is a sign of continuing global confidence in London and its future growth.
“But it’s vital that the government makes a similar commitment to public sector investment in the city’s infrastructure – particularly its transport system.”
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