City of London Economic Research

Coming Together: The importance of face-to-face contact for business relationships in the City

 

Mikaela Belcher and Hugo Le Ridou, Reed Smith Trainee Solicitors

 

The City’s best resource is its people. Although we are now able to work from anywhere, anytime, businesses remain willing to invest heavily in offices in the City due to the rich interconnections and expertise available within the Square Mile.

As incoming trainee solicitors at Reed Smith LLP, a Global 20 law firm, we partnered with the City of London Corporation to find out how face-to-face interactions contribute to the City’s competitive edge on a global scale.

 We conducted twelve interviews with professionals working within financial, legal, and professional services in the City; our findings are outlined below.

 

• The importance of the Square Mile for sharing knowledge and accessing global talent.

Participants all stressed the importance of having a ‘City location’ to attract talent, host partners, and meet clients. The client-focused nature and complexities inherent to financial and professional services made networking events and informal encounters valuable for city businesses. Face-to-face contact in the Square Mile allows for a “freer exchange of ideas” and making complex and nuanced points that might be lost on paper.

 Interviewees were overwhelmingly positive about the City’s network, feeling that there was always a trusted advisor moments away. This connectivity fosters strong inter-firm knowledge sharing and was also seen to be a catalyst for career development in the City: many interviewees had found jobs through their City networks and more senior workers had built a ‘City Career’ thanks to this.

• Business opportunities are still created through proximity and face-to-face contact

These formal and informal face-to-face interactions in the City generate new business opportunities. Not only does a City location lend a certain prestige and credibility to a business, interviewees were more likely to interact with firms, professional networks, and clients that hosted events in direct proximity.

Events and meetings hosted in the City, were seen as more convenient and therefore were more likely to attract participants than events outside the Square Mile. At such events, “new business relationships can arise just from people meeting you for a short period of time, for example very often people get in touch after attending a talk or presentation where you were presenting. It’s not about the knowledge necessarily … but about the person themselves.”

• Face-to-face contact helps build trust in the business relationship

Face-to-face contact with business partners was always interviewees’ preferred way of understanding a client’s needs, deepening the relationship, and understanding complex ideas. As one interviewee put it, “you never know what somebody actually wants until you sit face-to-face with them with an example of what you’re going to produce.” Regular face-to-face contact brings a personal element and a deeper understanding of business needs into client services, which gave participants “a much better working relationship”. 

Face-to-face relationship management was also seen - across different industries - as the principal way for firms to differentiate themselves from their competitors, who on paper might offer similar services: “The key differentiators are who you trust, and who you think can pull a deal through.”

 The City’s best resource is its people. This ecosystem relies on the network of related businesses and industries that operate here. The City of London Corporation is currently undertaking an extensive programme of interviews, polling and research to deepen the understanding of the specific and distinct business advantages of locating in London – and more broadly in the UK – and the reasons why clients choose to use the world-leading FPS & tech services based here. This programme of work will highlight how the City is continuing as the global hub for financial and professional services.

 

Creative professionals in the Square Mile

 

By Dr Edward Jones Research Officer at the City of London Corporation

 

Creative professionals might make up a small proportion of the City’s workforce but they are a crucial component of the wider business draw of the Square Mile. Whilst accounting for 7% of City professionals, creative talent provides crucial services to other businesses, helping to foster innovation and support competitiveness. Digital breakthroughs lead to innovation, and advertising and marketing expertise aids business communication, meaning that creative skills help City businesses push the boundaries and remain competitive. So its unsurprising that the largest employers of creative talent in the City are those which complement the wider business ecosystem – digital agencies, publishers, advertisers and architects.

More than half of the creative jobs in the City (18,405 workers) are in tech businesses. These jobs in IT, software and computer services have seen phenomenal growth in recent years, increasing 80% since 2010. This outpaces the growth of this sector in London (54%) and in Great Britain as a whole (48%). Their location in the Square Mile means they are close to the clients and competitors that keep them at the cutting edge. Digital tools and capabilities are rapidly transforming other services as fintech, insuretech, legal tech and regtech become part of the ecosystem’s landscape. This process requires the specialist knowledge of digital agencies, whose growth in recent years reflects the increasingly crucial role of tech to City businesses.

 

 

Both publishing (6,200 workers) and advertising and marketing (4,675 workers) also employ a lot of workers in the City, the latter having more than doubled its job count since 2010. The strength of these specialisms highlights the importance of communication and messaging to the knowledge based businesses in and around the Square Mile today.

The music, performing and visual arts sector is a small but fast-growing component of the City’s creative workforce. Home to world-leading cultural institutions such as the Barbican, the Guildhall School of Music and Drama, and the London Symphony Orchestra, the cultural impact of City is also felt in the presence of artists and performers, who have increased in number by 145% between 2010 and 2016, albeit from a modest numerical base of 745 professionals.

 

Our recent City as a Place for People report showed that there is an increasing blurring between specialisms, with creative solutions and novel perspectives being readily adopted in fields such as finance, insurance and law. The creative work done in-house by IT, marketing or communications workers is not necessarily captured in official estimates like the Business Register and Employment Survey (used in this blog), which are based only on the business area of the employing firm. This means that creative professionals in the Square Mile might will likely make up much more than the official 7% of the workforce.

The Culture Mile initiative has focused interest in the creative ecology of the City. An exciting new research project has recently begun exploring creative enterprise in Culture Mile, getting to grips with the activities which characterise the area’s unique creative offer. The data analysis and in-depth case studies that this project will generate promises to shed further light on the appeal of a Square Mile location for creative businesses.

 

Banks: in the City and across the UK

 

By Katharina Ehrhart and Fiona Morrill Researchers in the City of London Research Team

 

Last week, Chancellor of the Exchequer Philip Hammond in his Mansion House speech, spoke about his vision for extending “London’s position as the world’s number one international financial services centre” post-Brexit.

The City is the home of global banking

Banking is a critical part of the City’s financial and professional services ecosystem that underpins the UK’s position as a global centre for finance. Across the UK there are over 250 foreign banks, but it is in the City that the world’s banking sector clusters. Banks from 26 countries are represented here and many cluster around the Bank of England. This includes banks from North and South America (US, Canada, Brazil), from Asia (China, India, Japan), from Africa (Ghana, Nigeria) as well as the Middle East, next to banks from several European countries (Germany, France, Spain).

Banks supporting businesses and households across the UK and Europe

In the words of the Governor of the Bank of England, Mark Carney, who also spoke at the Mansion House, “The City is Europe’s investment banker, and it is leading the internationalisation of green, Islamic, renminbi and rupee finance.” Moreover, he noted that the UK banking system channelled £300 billion in finance to UK businesses and helped 700,000 households to purchase homes in 2017.

Banks’ direct contribution to the UK economy

As well as the services that banks provide, they are major direct contributors to the economy. They provide 360,000 jobs across the UK and over 96% of these jobs are in large firms. One in five of those banking jobs are based in the City.

Banks also account for £35.4bn or 5% of all government tax receipts - enough to pay for the total UK transport budget, including central government and local authority spending.

Our Total Tax Contribution research identified that more than 90% of the taxes banks generate for the UK depend on the geographical location of their operations and employees – a higher proportion than any other financial service, highlighting again, the value that banks locating in the UK bring to the country as a whole.

 

Sources: ONS, Business Register & Employment Survey 2016; CoLC & PwC, Total Tax Contribution of UK Financial Services, 2017; BEIS, Business Population Estimates, 2017; ukpublicspending.co.uk, Mint UK data, 2018. Mark Carney, “New Economy, New Finance, New Bank”, 21 June 2018.

The Digital Square Mile

 

By Dr Edward Jones, Researcher in the City of London Research Team 

 

The growth of the digital industries is a much-discussed phenomenon, credited with having transformed the economic fortunes of our near neighbours in Shoreditch and Hoxton. At the metropolitan scale, the Mayor of London anticipates that ‘Information and Communication’ (ICT) is set to increase to 668,000 jobs by 2050[1]. Finance and Insurance firms remain the biggest employers in the Square Mile (discussed in our 6^th October blog post[2]), but ICT is growing – potentially in response to the digital appetite of the City’s larger sectors.

Recently released Business Register and Employment Survey (BRES) data allows us to analyse the digital industries component of ICT in greater detail. Tech City UK has identified several four-digit Standard Industrial Classification (SIC) codes which justifiably cover the ‘digital tech’ sector[3]. Zooming in on these, while stripping out activities like the manufacture and repair of computer equipment, gives a fine-grained view of the performance of the ‘digital tech’ sector of the Square Mile, shown on the chart below.

 

 

The data suggests City digital firms might indeed be supporting the wider finance and insurance cluster. The City’s ‘computer consultancy activities’ sector has more than doubled to 13,500 employees from 2010 to 2016, and has widened its lead over other digital tech sectors. Computer consultancy across London has grown far less dramatically – at 42% over the same period.

Overall, Square Mile digital tech employees have increased by just over a half between 2010 and 2016, from 19,700 to 30,700. It may even be the case that digital tech activity in the City is greater than these figures suggest, for three main reasons:

Firstly, digital employees may be wrapped up in the wider SIC category of their firm. Digital and tech activities could be carried out in-house by businesses which lie outside ICT, such as financial services (FS) and insurance firms. Fintech is a growing phenomenon – PwC view digital innovations and technology-enabled change increasingly as a mainstream element of FS firms,[4] while Deloitte stress technological innovation as a major driver of change for FS[5].

Secondly, FS firms could ‘buy in’ digital tech expertise from businesses located outside the Square Mile. Recent research for us by KPMG indicates that 61% of financial institutions are partnering with innovators to develop their fintech capabilities[6]. City firms might exploit the digital business offer of the wider ecosystem, using the services of businesses registered in the rest of London, or indeed further afield.

Thirdly, firms doing digital tech work don’t necessarily categorise themselves as such. Both Spotify and Google have declared themselves part of the ‘other business support service activities not elsewhere classified’ SIC category[7]. The variety and reach of SIC codes do not necessarily capture the diversity of activities carried out by firms, and businesses might not choose to adopt the code which closely matches their overall function. Nathan and Rosso[8] have used big data to investigate ICT firms, and found the sector 42% larger than SIC-based estimates.

The chart below compares the numbers employed in the City’s digital tech with those employed in two generic support/ auxiliary categories. These ‘other’ SIC categories contain sizeable numbers of employees. It may be the case that, like Google and Spotify, some of the City’s digital tech firms form part of these less precise groupings.

 

 

The Information and Communication is a small but growing segment of the City’s economy, whose capacities to spark innovations in finance and insurance mean that its clout could be larger than SIC-based employee counts imply. The increasing use of digital skills by FS firms suggest that tech employees will continue to play a crucial role supporting, and integrating into, the wider cluster of finance and insurance businesses.

 

[1] https://data.london.gov.uk/dataset/long-term-labour-market-projections

[2] http://colresearch.typepad.com/colresearch/2017/10/jobs-growth-in-the-city-of-london-1.html

[3] http://www.techcityuk.com/wp-content/uploads/2016/02/Tech-Nation-2016_FINAL-ONLINE-1.pdf

[4] https://www.pwc.com/gx/en/industries/financial-services/publications/financial-services-technology-2020-and-beyond-embracing-disruption.html

[5] https://dupress.deloitte.com/dup-us-en/industry/financial-services/talent-technology-future-of-financial-services-survey.html

[6] https://home.kpmg.com/uk/en/home/insights/2017/10/value-of-fintech.html

[7] http://rss.onlinelibrary.wiley.com/hub/issue/10.1111/sign.2016.13.issue-3/

[8]http://eprints.lse.ac.uk/65211/1/Max_Mapping%20digital%20businesses%20with%20Big%20Data.pdf

 

 

 

Jobs Growth in the City of London

 

By Dr Laura Davison, Head of Research at the Economic Development Office, City of London Corporation

 

This week has seen the annual release of the latest Business Register and Employee Survey (BRES)[1], which we use as the basis for our reporting of jobs and employment by sector. The latest figures estimate jobs as at 9^th September 2016, and here I’ve looked at both what the figures tell us about overall employment in the City of London (Square Mile), and how this has changed from the year before (i.e. the change from 2015 to 2016).

Across these 12 months, jobs in the City have increased from 455K to 483K (2016) – an increase of 28K jobs (6%). This builds on a strong pattern of growth in the City since 2010, where every year since 2013 has seen overall jobs growth, as shown in the following chart.

 

 

 

The bulk of the new jobs created in the most recent year have been in the City’s largest sector – finance and insurance. This accounted for 18K new jobs – an 11% rise to 182K total jobs, and equivalent to 64% of the City’s total jobs growth. Within this, banking (2.5K), non-life insurance (3K), insurance brokers (2.5K) and ‘other financial services’ (2.5K) were the largest growth components.

The other City sector showing notable growth was business administration, with 5.5K new jobs – a nearly 10% increase to 63K jobs; this built on very strong growth in the previous year also. This sector is wide-ranging, covering areas such as employment agencies, leasing office equipment, and building services – though in this instance, the majority of growth (3K jobs) fell into the ‘other’ category, followed by employment placement agencies (1.5K) and general cleaning of buildings (1K).

Professional services remains the City’s second largest sector, with 115.5K jobs in 2016. In contrast to 2014 - 2015, this period has seen a small fall in jobs (2.5K fewer, a drop of 2%). Within this, though, two of the three subsectors comprising ‘related’ professional services[2] have seen small jobs growth – a 2.5K rise in legal services jobs (to 61K) and a 1K rise in management consultancy jobs (to 31K), while the third area – accounting, has seen a small fall  (0.5K fewer jobs, now 17K).                

The information and communication sector, which has also shown strong growth in the City in recent years, has slowed this year, rising from 37K to 38K jobs (2.7% growth).

Other sectors in the City are both relatively small and have seen only small changes this year, although it is worth highlighting that construction has grown by 1.5K jobs to 7.5K jobs, and health similarly has grown by 1.5K to 7K jobs.

As the following chart shows, the balance of jobs in the City has remained very consistent. In 2015, the three biggest sectors accounted for 75% of jobs in the Square Mile – 36% financial services, 26% professional services, and 13% business services. In 2016, the overall figure remains 75%, split 38% financial services, 24% professional services, and 13% business services.

 

 

 

The data also reinforces the City’s role in wider London growth, where it makes up 9.4% of jobs. Net employment growth across London was nearly 71K new jobs, with the City accounting for the highest number of these (28K), followed by Camden (15K) and Hounslow (11K). 

 

[1] https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/

businessregisterandemploymentsurveybresprovisionalresults/provisionalresults2016revisedresults2015

[2] Professional services is a very wide-ranging category, for example spanning areas such as architecture, research and development, advertising, and veterinary services. Here, ‘related professional services’ refers to those subsectors with the closest linkages to finance – legal, accountancy, and management consultancy. 

 

 

 

Why is it important for large international banks to be based in the City?

 

By Saif Ullah, Researcher in the City of London Research Team 

 

Over the last month, several large international banks have begun to provide more details about their location plans post-Brexit. Some of the announcements have arisen partly as a response to the Bank of England’s request for information of banks’ plans should the UK leave the EU without an exit agreement. Major US banks such as Citi and Morgan Stanley both revealed that they would be creating new EU bases in Frankfurt, potentially involving some staff moving from offices in London, while Bank of America announced that it had selected Dublin as its post-Brexit EU hub. Several Japanese banks, such as MUFG, Nomura, Daiwa and SMFG have also recently revealed plans to set up new offices or subsidiaries in other EU states (all plan to base EU operations in Frankfurt, with the exception of MUFG which will reportedly expand its Amsterdam office).

In the Research team, we’ve been closely monitoring firm movement announcements of financial and professional services firms over the last year. More recently, we’ve been looking at the implications of large bank’s moving staff away from the City to other locations and what they stand to lose as a result.

So far, it is unclear how many bank employees could leave firms in London and the City. While it is more than likely that there will be a number of staff relocations abroad, many banks have yet to lay out specifics on the potential number of moves, given the uncertainty over how Brexit negotiations may develop. Actual numbers of confirmed staff moves are currently at the lower end (500-600),[1] but recent estimates from Oliver Wyman suggest that as many as 40k employees from wholesale banking alone could eventually leave the UK as a result of Brexit.

Yet several factors may dictate whether large banks keep the majority of their employees in London, and more specifically the City. One of the key motivations for banks to keep staff in London is the attractiveness of the capital as a place to live and work, a factor recently highlighted by the City Corporation’s Policy Chairman.

Another key factor is that banks benefit from being based in the City given the strong mutual dependency between financial services firms, professional services and tech firms. Fiona’s blog last week illustrated some of the key business demand relationships between financial services and other IT and professional services sectors in the UK, with FS accounting for over a quarter of business demand for telecoms, 22% of demand for computer programming services, 17% of demand for legal services, and almost a third of demand for head office activity and management consultancy.  

With proximity to clients and customers being a major factor in firms’ location decisions, it stands to reason that major banks choose to locate in the City given the immediacy of partners in other related sectors, whose services they require. In addition, the City’s dense business cluster allows such firms to benefit and recruit from a large pool of specialist, skilled workers.

This links neatly on to my final point – the importance of the UK’s workforce to large banks’ and the availability of skilled workers in London and more widely. As Laura highlighted in a blog published earlier this year, large financial service firms employ huge numbers of workers in the UK, and large banks in particular are dominant in terms of banking employment numbers – 80 very large banks (500+ workers) employ 84% of bank workers in the UK.

 

The same is true of large banks based in the City. The City accounts for 16% of banking employment in the UK and has the highest concentration of banking jobs in London (58k compared to 46k in Canary Wharf).[2] Nine of the largest global investment banks are based in the City, employing over 29k people, more than 50% of banking jobs in the City. Large banks are reliant on significant worker numbers across the UK and in the City specifically, and this mix of talent is not something that can be readily replaced or transferred to other vicinities.

The current wave of media reports concerning bank staff moves suggests that there could be an exodus of City workers on the horizon. However, the benefits of a City location for banks in terms of access to required services, attractiveness as a location, and depth of talent, remain significant. Recent commitments from the likes of Deutsche Bank to maintain a major presence in the City suggest that whatever happens, large banks will recognise the capital as a prime location for years to come.

 

 

[1] Based on the City Corporation’s internal FS firm movement tracker

[2] ONS, Business Register and Employment Survey, October 2016

Why do firms choose London for finance?

 

By Fiona Morrill, Financial Services Research Officer in the Economic Development Office

 

Last week (4/07/17), Edouard Philippe, the French prime minister, outlined a series of measures to attract international businesses to Paris, with the aim of making the city the “number one financial centre in Europe after Brexit”. These measures include: scrapping the highest bracket of payroll tax on finance employees and lower corporation tax rates; reviewing financial regulation; and establish an international tribunal in Paris to handle financial cases in English, reflecting the prevalence of English law in financial contracts[1]. While Paris is undoubtedly trying to emulate the success of London as the world’s leading global financial centre, London’s attractiveness to international firms goes beyond its competitive tax regime, strong regulatory regime, robust legal framework, and the use of the English law and language.

A couple of weeks ago (23/06/17), our research manager Ed looked at why firms continue to choose London as a base – its size, thriving and talented population and workforce, and growing network of innovative and competitive business services. This week, we’re looking at how London stacks up against Paris and other major European centres as a place to raise finance, providing firms with the benefits of deep and liquid capital pools and financial services expertise, as well as what it gives back to the UK economy.

Source: Data taken from the World Federation of Exchanges, the Bank for International Settlements, the World Trade Organisation, Eurostat, Helaba, the Office for National Statistics, the Organisation for Economic Co-operation and Development and fDi Intelligence.

Financing business growth, capital investment and job creation

As a cluster of highly specialised financial and related professional services firms, drawing on a pool of talented, highly-skilled staff, London continues to draw internationally mobile firms to its stock exchange.  15% of all listed foreign companies choose the London Stock Exchange to list their shares and raise capital to finance growth, and the LSE has over double the number of international firms listed than its closest European competitor, Euronext, based in Paris. If we look at the flow of funds based on initial public offerings (companies listing shares on the exchange for the first time) in 2017 so far, newly listed companies have raised $3.4 billion in London, compared with $590 million in Paris.

European financial centres
Create your own infographics

 

Firms can also borrow to help fund job-creating investment and spending – the UK’s has the highest ratio of credit to the private sector as a percentage of GDP, illustrating that the UK punches well above its weight when it comes to lending and supporting business activity. Foreign governments, businesses, and financial services firms choose London as a place to raise debt finance; with the value of outstanding international funding issued in London at $2.8 trillion, over double the value of London’s closest European competitor, France. The world’s largest corporate Masala bond started trading on the London Stock Exchange in March, following several high profile Rupee bond issuances, reflecting the diverse and international nature of finance in London[2].

Managing risk and promoting trade

As well as raising finance here, firms choose to trade currencies to manage risk in the UK, either through their treasury functions or directly – over a third of total foreign exchange turnover is traded in the UK, almost double the average daily turnover of its next closest competitor, the US. If we look at euros specifically, the UK accounts for 43% of global trading in euros, over eight times the amount of euros traded in France.  The forex market is critical in facilitating global investing, by allowing companies to buy and sell foreign assets and securities, as well as supporting import and export trade. This is supported by the fact that the UK accounted for 17% of total global financial services exports in 2016, while Germany, France and Ireland accounted for 6%, 3% and 3% respectively.

What does this mean for London and the UK?

London’s specialised and interlinked ecosystem of complementary financial and advisory services contributes to its strengths as a both a global and European hub for firms looking to grow and trade, and enables the financial services industry to act as an engine of growth and employment in the UK. As well as FS being the largest net contributor to the UK’s trade surplus in services, with London accounting for over half of FS exports, London acts as a draw for international investment. London attracted 149 overseas direct investment (ODI) financial services projects between December 2013 to November 2016, creating over 5,000 jobs, and London’s financial services industry employs over double the amount of workers as Frankfurt’s, and generates over six times the amount of economic output as Dublin. As Ed’s blog notes, a high proportion of London’s workers are graduates – contributing to the highly-skilled and highly-productive nature of financial services.

Looking ahead, the outcome of Brexit negotiations on the UK’s access to a highly-skilled and talented labour pool, as well as market access to our largest financial services trading partner, the EU27, will have implications for the competitiveness of the financial services industry, and its ability to contribute to give back in terms of generating trade and investment, providing jobs, and contributing to output and tax revenues. However, the City’s comparative advantage as an outward-looking centre for international commerce, finance and trade, will remain fundamental to its future competitiveness.

[1] https://www.ft.com/content/464c67d8-630e-11e7-91a7-502f7ee26895

[2] https://www.lseg.com/resources/media-centre/press-releases/london-stock-exchange-welcomes-largest-corporate-bond-issuance-cis-region-2014

 

 

 

Tech and the City - is it the place to be for fast-growing tech?

 

By Maxine Kennedy, Researcher in the City of London Research Team

 

The tech sector identifies the City of London as having all the ingredients for startup success – talent, capital, superb infrastructure and potential for partnerships with larger corporates – according to a new research report launched at MIPIM, the world’s largest property convention.

Commissioned by the City of London Corporation and the City Property Association, in association with Cushman and Wakefield and KPMG, the research aimed to find out whether the City is still attractive to cutting-edge businesses – is it the place to be for fast-growing tech, and if not, why not?

This is an important time to be asking this question: tech jobs now make up approximately 8% of the City’s workforce, and the City is one of the few London boroughs to have seen year-on-year growth in the number of startups. The growth of AI and automation is likely to affect traditional City sectors, namely financial and professional services.

Interviews were carried out with landlords, large corporates, the tech sector and other interested parties and focused on startups in the fintech, legaltech and insurtech spheres.

For me, three interesting themes came out of the research:

 

1. There remains a misperception about the cost of being located in the City. Some firms interviewed for this study view the City as a traditional and expensive location, yet firms were surprised at the relative cost of renting here. Property owners were quick to point out that for every modern high-rise and listed building, there are other offices that offer a better fit in terms of size or budget. City rents are generally lower than in Paddington, Marylebone and Mayfair, and on par with others such as Southbank and Shoreditch.

 

2. As well as office space at a suitable cost, what startups really need is flexible leases that allow them to scale. Co-working spaces, such as WeWork are growing rapidly, reflecting the demand for this type of space. WeWork alone accounted for 342,450 sq ft across 6 deals in the City in 2016 and 546,549 sq ft across 7 deals in 2015, making them the tenant who acquired the most space in the City in both 2016 and 2015. Yet, there are only a handful of new entrants and the feeling is that demand is still outstripping supply. The research found that just under half of those in accelerator or incubator spaces are in a co-working or shared working space. A further 20% are located within parent organisations - showing how few are in traditional leased space.

 

3. The City’s built environment was highlighted as a key draw, especially in terms of its many transport links but there was a feeling that the perception of the City could become more aligned with tech if there were more independent and pop up shops and street vendors. Promoting the many hidden green spaces such as churchyards was also as a way to make the City more appealing to the start-up culture. Placemaking, therefore, is increasingly becoming integral to a competitive offer.

 

Overall, interviewees felt that by promoting emerging technology startups the City would ultimately benefit from being at the centre stage of advances in innovation.

These findings echo those of a report we released last year, which found that SMEs and startups in the City really value flexible space to support their growing business. The research also highlighted that small businesses believe that being located in the City helps them to attract the best talent.

Click here to read the full report

 

 

London’s growth in employment: sectors and patterns

 

By Dr Laura Davison, Head of Research at the Economic Development Office, City of London Corporation

 

London is a thriving city, with recent years having seen strong economic and population growth. Across the next few weeks, we’ll be looking in the blog at some of the data around patterns of growth and drivers of these changes.

This week (20/02/17), I’ve looked at jobs growth, using a combination of the Office of National Statistics (ONS) data on workforce jobs and the Business Register and Employment Survey (BRES), to look at some long term and more recent changes.

The first chart plots London’s workforce jobs from 2006 to 2016 – with the lines showing percentage year-on-year growth (or decline where they drop below zero) for London and the UK. Across this period, London has grown by 967K jobs – a 20% increase, from 4.76 million to 5.73 million. UK jobs increased by 8.3% (2.65 million) to 34.59 million. Both London and the UK saw negative or no growth in the years to September 2009 and 2010, but have consistently grown since – London more rapidly than the UK.

  

The next chart - drawing on the same data at a sectoral level – gives a snapshot view of the sectors driving London’s growth across this period – looking at the number of workforce jobs in different sectors in 2006, 2011, and 2016.

   

You can see that in most cases, the increase in employment has been driven by London’s strengths – particularly in the professional and business services areas. The wholesale and retail trade is one exception – having shown small overall growth, but a decline in the period to 2011. Public administration and manufacturing both shrank over this ten-year period.

The next chart looks in more detail at sectoral changes year on year for the more recent data, focusing on 2010 to 2015 – in which stronger growth has been seen. This draws on a different data source – the Business Register and Employment Survey (BRES) which is the official source of employment figures by geography and industry, with the most recent figures being for 2015 (published autumn 2016 – and this data series begins in 2009, so can’t be used to look further back). Note that there are differences in the figures between the two datasets used here, reflecting their different methodologies.

 

Again, you can see from the total employment (dashed line), the consistent growth in employment across this period – with the dotted line showing particularly strong growth in 2014 and 2015. You also get a better feel from the stacked bars as to the sectors driving growth in each year (or shrinking where they drop below the zero baseline). Employment grew from 4.32 million in 2010 to 5.04 million in 2015 – a rise of 714K, 17%.

You can also see the key role that services have played in shaping London’s growth. The four big business services sectors – information and communication, financial, professional, and business administration – together accounted for 38% of London employment in 2010, and 40% in 2015, having grown by 354K jobs – 21% - across this period.

These business services strengths help to underpin London’s economic success – ranked top in PwC’s latest Cities of Opportunity report (overall and for ‘economic clout’), Kearney’s Global Cities Index (overall and for ‘top global services firms’) and Z/Yen’s latest Global Financial Centres Index.

London’s entertainment offer - also world-leading (ranked top for ‘Cultural experience’ in Kearney’s Index, and for ‘Entertainment and attractions’ by PwC), has also been underpinned by strong employment growth. The combination of retail, accommodation and food, and arts and entertainment services sectors saw 16% growth, with over 150K new jobs – and accounting for 21% of London employment in 2015.  

Finally, London’s growing population has been supported by a rise in jobs in health and education – growing by 21% from 2010 to 2015, again more than 150K new jobs – and comprising 18% of London employment in 2015.

Overall, London has seen strong growth across the last ten years, in particular across the last five - strongly driven by its business services economy, and with wider growth across entertainment and hospitality, and health and education.

 

 

Poverty in London

 By Robert Clear, Researcher in the City of London Research Team

 

Poverty is one of the most persistent and high profile challenges for policymakers in the capital. Among the most important tools available to help understand the nature of the problem, and how it is changing over time, are the English Indices of Deprivation. These divide the country into 32,844 small areas (known as Lower-layer Super Output Areas – or LSOAs), and rank them in order of how deprived they are. In the latest version of the indices this is determined using thirty seven indicators that fall into seven groups (listed with their relative weightings in brackets):

• Income Deprivation (22.5%)
• Employment Deprivation (22.5%)
• Education, Skills and Training Deprivation (13.5%)
• Health Deprivation and Disability (13.5%)
• Crime (9.3%)
• Barriers to Housing and Services (9.3%)
• Living Environment Deprivation (9.3%)

The Indices are designed for comparison, rather than quantifying how deprived specific small areas are and they are particularly useful for exploring the patterns of deprivation across larger areas. Below are maps of London from 2004 and 2015, where the status of the capital’s LSOAs are coloured according to which band they occupy in the rankings (whether, for example, they are in the 5% most deprived vs the 50% least deprived).

 

 

Looking first at the 2004 map, we can see high concentrations of deprivation in inner London, particularly in Tower Hamlets, Newham and the eastern half of Haringey. There is a striking concentration in the inner east of the city, stretching upwards through hackney and towards Tottenham. This reflects a longstanding trend in which the capital’s deprivation has been slanted towards its more densely populated core and away from the suburbs.

In the 2015 map, however, the spatial patterns of deprivation have changed.

 

Here we can see that deprivation is more widely spread across the city. The large, deep purple areas of inner London that were among the most deprived 20% in England are now heavily punctuated by the lighter shades that indicate lower levels of deprivation. At the same time, large areas of suburban Enfield and Barking and Dagenham have become poorer. There are also significant increases in poverty on the capital’s southern perimeter in Bromley and Croydon, and at its northern edge in Havering. Some boroughs have seen comparatively little change, with Richmond and Kingston two of the least acutely deprived in the capital in 2004 and remaining so in 2015.

These, however, are among the few. Overall, the maps suggest that in the eleven years that separate them, poverty thinned across London’s core and its East End, and shifted to its outer boroughs. The maps describe relative degree of poverty, rather than expressing it as an absolute measure – but illustrate the challenge of reducing deprivation across the board, and preventing it from moving from one area to another.