Service sector dominates London economy
The service sector accounted for 87 per cent of the London economy as measured by gross value added (GVA) in 2004 compared to 76 per cent in 1989, according to data published today by the Office for National Statistics.
London’s service sector accounted for 15 per cent of the total economic activity of the UK in 2004, greater than the total contribution of all other UK countries and regions except the South East. In 2004, the service sector accounted for 76 per cent of all UK GVA; the figure in 1989, the earliest year for which comparable regional data are available, was 62 per cent.
In 2004 the South East contributed most to the UK economy in the production industries at 3 per cent compared to 4 per cent in 1989. Overall, the contribution to UK total GVA by the production industries has declined from 36 per cent in 1989 to 23 per cent in 2004.
Today’s release also shows GVA increasing in all regions of the UK, before allowing for inflation. The fastest growing regions were not the same in 2005 as they were in 1990. Growth in GVA between 1989 and 1990 was greatest in Northern Ireland at 9.8 per cent and lowest in Wales, 7.9 per cent. Between 2004 and 2005 the greatest growth was in the North East, East Midlands and London (4.4 per cent), with the lowest in the South East (3.5 per cent).
For the UK as a whole, the growth in the service industries has been driven by an increase in the renting, real estate and business activities industry, whose sub-sectors include accountancy, consultancy, legal services, goods rental and real estate activities, which grew by 249 per cent between 1989 and 2004 while the production industries grew by 45 per cent. Other service industries with growth rates in excess of the UK average service industries growth of 176 per cent were financial intermediation (220 per cent) and health and social work (196 per cent Real estate, renting and business activities was the biggest single industry in London, accounting for 36 per cent of the capital’s GVA in 2004, compared to 25 per cent in 1989. Financial intermediation was London’s second largest industry sector in 2004 at 19 per cent compared to 12 per cent in 1989.
Financial intermediation accounted for 8 per cent of the Scottish economy in 2004 compared to 4 per cent in 1989. Overall growth in Scotland between 1989 and 2004 was 109 per cent, with the service industries accounting for 73 per cent of the Scottish economy in 2004 compared to 62 per cent in 1989. Industries such as real estate, renting and business activities (19 per cent share in 2004), wholesale and retail trade (11 per cent), health and social services (9 per cent) and financial intermediation accounted for much of this change.
In 2004 manufacturing was still the largest single industry sector in the North East, East Midlands, Wales and Northern Ireland at 19 per cent, 21 per cent, 18 per cent and 16 per cent respectively. The latest ONS estimates not only cover the countries and regions of the UK, but also focus on sub-regions and local areas, providing data from 1995 to 2004. These figures show that while the Highlands and Islands had the lowest share at 0.4 per cent of GVA in the UK in 2004, the area’s GVA grew by 6.6 per cent between 2003 and 2004, the highest growth among all Scottish sub-regions.
Provisional estimates of regional GVA for 2005 are being released for the first time today, with industry detail only available up to 2004. See First Release for more detail.
