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Sadiq Khan aims to add £100bn to London’s economy by 2035 | London
Sadiq Khan, the mayor of London, has announced an ambitious plan to add more than £100bn to the capital’s economy within a decade.
Unveiling what he is calling the London growth plan, Khan said he was allocating hundreds of millions of pounds in devolved funding in an attempt to return the annual productivity growth of the London economy to the levels seen before the 2008 financial crisis.
Targeting areas such as housing, transport, training, high streets and business support, he said the plan would “turbo-charge” the efficiency of the country’s most powerful economic hub.
The proposals include allocating more than £300m in central government skills funding to local schemes to help create more than 150,000 jobs, with a focus on fair pay and good work, delivering on a campaign pledge Khan made before his re-election to a historic third term last May.
It also includes upgrades for London’s public transport network: an extension of the Docklands Light Railway to Thamesmead in the south-east, pushing the Bakerloo underground farther south to Lewisham, and using existing track to create a West London Orbital overground service.
Central to Khan’s ambition of adding £107bn to the size of the London economy by 2035 will be rebooting its productivity growth after a dismal performance in the UK and other advanced economies since the 2008 financial crisis.
Productivity growth – a key economic statistic that measures output per hour of work – is considered vital to raising living standards by enabling employers to pay higher wages. London’s productivity had grown by about 3.16% a year on average between 1998 and 2007, but then plunged to an average rate of just 0.12% in the years up to 2022.
Hitting Khan’s targets would involve London’s productivity growth reaching an average of 2% a year between 2025 and 2035. Achieving the £107bn goal would put an extra £11,000 on average in the pockets of London’s near-9-million population, and generate an extra £27.5bn in taxes to the Treasury in 2035.
However, this would involve breaking entirely with recent history.
While London remains Britain’s most productive region – at more than 25% above the national average – City Hall’s own analysis shows the capital has suffered a far deeper slowdown in growth rates over the past 15 years.
Highlighting the challenge for the mayor, London’s productivity only grew in real terms by a total of 1.5% between 2008 and 2021, compared with 6.9% growth for the country as a whole.
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National productivity levels have been falling recently, while the Office for Budget Responsibility forecasts that the trend growth rate will only reach 1.25% by 2029. The most recent subnational figures show London’s productivity fell by 0.9% in 2022, the largest of any region.
Khan said his plan would “provide a golden opportunity to turbo-charge growth and unlock London’s full potential – for the benefit of all Londoners and the whole country”.
“Ultimately, growth means little if people cannot feel the benefits or see the positive change it brings to their area. So our goal is to deliver economic growth in every corner of our city that helps to raise living standards, puts more money in people’s pockets and enables us to invest in our public services, as we continue to build a fairer and more prosperous London for all.”
Article by:Source: Richard Partington Economics correspondent