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London faces recession worse than Nineties
Jonathan Prynn, Consumer Affairs Editor10.10.08
London is at the start of an 18-month recession that will be longer and deeper than the downturn in the rest of the country, a leading forecaster warned today.
The capital's dependence on the City will drag the entire London economy down into a recession that could be worse than the early Nineties, according to the Centre for Economics and Business Research.
By the end of next year more than 120,000 London workers will have lost their jobs, many in high-paid professions such as advertising, accountancy and the law, as well as banking, the think tank says.
The shakeout will have a huge knock-on effect for restaurants, bars and shops across the capital. Already many restaurants in the City are empty at lunchtime.
The CEBR forecast suggests that London's £300 billion economy started to shrink this summer and will contract by one per cent next year.
Painfully slow growth of 1.6 per cent will resume in 2010 with the recovery picking up pace as the 2012 Olympics approach.
The financial services industry is set to be hit much harder than the general London economy, shrinking by five per cent this year and nine per cent next year.
Ben Read, managing economist at CEBR, said: “The London economy has enjoyed the fruits of the boom in financial services but will now suffer a painful setback in the wake of the banking crisis.
“For those thinking the worst is already over 2009 is likely to come as a rude surprise. Londoners need to be prepared for a return to early Nineties recession … House prices are set to fall by £50,000 from their peak and unemployment will rise by 120,000.”
The London recession will end 17 years of continuous and often rapid growth which saw the capital briefly claim the mantle of the world's
financial capital from New York.
Last year, the capital's GDP grew by three per cent and the City by 10 per cent. The CEBR had previously forecast that London would narrowly avoid outright recession but the turmoil of the past month has forced its economists to rewrite its figures.
Reader views (3)
Maybe it's time to move, Steve!
- Paul, London
maybe some house prices will fall and some real people will get to buy rather than these super-charged greedy immoral people who let it all lhappen
- John Smith, Allston, MA USA
London is such a depressing place to live the recession will go unnoticed in my eyes.
- Steve, London
