London’s financial sector is over the worst and showing signs of recovery, according to a survey by independent economics forecaster the Centre for Economics and Business Research (CEBR).
The CEBR's latest quarterly survey of London's economy found that share trading volumes in the City were up about a quarter on the same time a year ago. Takeover activity and floatations are also up on last year.
The City’s improving health will see London’s economy as a whole grow by 1.6 per cent this year, the survey predicts. During 2003, the capital’s economy was stagnant with 0 per cent growth.
Growth is expected to accelerate to 2.7 per cent in 2004.
"The worst now seems to be over," said Douglas McWilliams, CEBR chief executive. "A recovery seems to have started in the City and - provided it continues - should spread out over the rest of London."
Many forecasters, including the CEBR, had previously reined in their GDP forecasts for London in 2003 to no more than 0.5 per cent.
But despite this, the CEBR is not forecasting an immediate pick-up in jobs. The jobs market in the financial services sector will stabilise by the end of 2003, it says, but will not begin to expand significantly until 2005.
"Obviously there are still risks to London," said Mr McWilliams. "Terrorism and international economic volatility are still potential problems... and consumer spending will probably be sluggish for some time.
"But our best guess is that London's growth should be leading the UK by next year."