08Appendix 2: Economic structure, investment, and human capital

Economic structure of London and peer cities

Figure 24: Unlike other global cities, real estate activities have been gaining relative weight in London’s economy

Source: ONS and OECD. Geographies based on ITL regions – Greater London, Brussels Capital Region, Stockholm Region, Île-de-France and New York-Newark-Bridgeport. Note: The real estate sector includes imputed rent due to data availability at the international level.

Investment composition by sector

Figure 25: Investment composition by sector in London

Source: ONS. Regional GFCF estimates by asset type: Experimental data. Note: Intangible assets are also known as intellectual property products; computer software and databases are allocated to the region where they are used and are estimated using employee location; R&D is allocated according to where the investment takes place using survey data.

Figure 26: Investment composition by sector in the UK excluding London

Source: ONS. Regional GFCF estimates by asset type: Experimental data. Note: Intangible assets are also known as intellectual property products; computer software and databases are allocated to the region where they are used and are estimated using employee location; R&D is allocated according to where the investment takes place using survey data.

Figure 27: Real estate investment is significantly below its pre-financial crisis peak

Source: ONS. Regional GFCF estimates by asset type: Experimental data. Note: Intangible assets are also known as intellectual property products; computer software and databases are allocated to the region where they are used and are estimated using employee location; R&D is allocated according to where the investment takes place using survey data.

Figure 28: Investment in intangibles is relatively low in London, even when looking at knowledge-intensive services specifically

Source: ONS. Regional GFCF estimates by asset type.*Information and communication, finance and insurance, and professional, scientific and technical activities. For information and communication, London’s intangible investment was historically higher than the other two geographies but converging overtime. By 2019, it was no longer the area with the highest share, surpassed by the areas outside the GSE.
Experimental data. Note: Intangible assets are also known as intellectual property products; computer software and databases are allocated to the region where they are used and are estimated using employee location; R&D is allocated according to where the investment takes place using survey data.

Figure 29: London’s R&D spending is relatively low and highly reliant on non-business spending

Source: ONS. Geography: ITL2 regions for areas outside London, where the Greater London definition is used. The ONS recently revised R&D at the national level, sub-national figures may be revised in the future. Non-business includes government, universities and the third sector.

Figure 30: Between 2004 and 2011, London was growing faster than all other regions. After 2011, human capital estimates show a stagnation, while other regions marginally converged

Source: ONS. Regional real employed human capital per head, ONS estimates. Data available between 2004 and 2018.