The UK's 2-Tier Economy - London (And Everyone Else)

Tyler Durden's picture

London’s economy may be decoupling from the rest of the U.K. at an accelerating pace. As Bloomberg's Niraj Shah explains, the capital’s contribution to U.K. output, house prices and financial jobs are all at a record high while the suicide rate is at a series low... while the rest of the nation is 'not'.

 

London Contribution to U.K. GDP at Record High

London’s GDP is larger than that of 12 of the 18 euro-area nations. London’s share of U.K. output measured by gross value added rose to a historic high of 21.9 percent in 2011, the latest available data from the ONS show. Scotland accounts for 8.2 percent of U.K. output. One in 28 Londoners is a millionaire, according to wealth analysts Wealth Insight.

Financial Sector’s Growing Dominance

The number of financial services jobs in London rose above the pre-crisis level last year to 688,000, according to lobby group TheCityUK. City jobs are forecast to rise by 2.7 percent this year to 707,500. The financial sector accounted for 21.1 percent of London’s output in 2010. Sixty percent of inner London workers are graduates, compared with 29 percent in northeast England, the ONS says

Record House Prices

The gap between London house prices and those in the rest of the U.K is widening. Values in London rose 12.3 percent in the 12 months through December, compared with 3.1 percent when the capital and southeast England are excluded. The average London house price was 450,000 pounds in December, compared with the national average of 250,000 pounds, the ONS says. That is 28.6 percent above the pre-crisis peak.

Suicide Rate Drops to Series Low

The suicide rate in London fell to a series-low of 8.7 deaths per 100,000 in 2012 from 8.9 per thousand in 2011. That compares with 12.4 deaths per 100,000 in the northwest. The number of London suicides fell to 576 in 2012 from 985 in 1981. In 25 years, the capital’s suicide rate has dropped to the lowest in the U.K. from the highest.

h/t @EconomistNiraj

 

So the question is - who is Mark Carney managing the economy for? or perhaps more accurately, which economy is he (or his central bank cronies) "boosting"

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NOTaREALmerican's picture

Great.   Now lets apply the same process for the top 20% and the "trash class" and start reporting on economic data for both, because treating the US (or UK) as a single country is somewhat pointless now.  

Herd Redirection Committee's picture

Top 20%?  Try top 0.5%.  In wealth, not income.

idea_hamster's picture

They got the memo on the suicide rate -- the London FX traders are working on it as of late.

NOTaREALmerican's picture

Re;  In wealth, not income.

The top .5% couldn't exist without lots of people helping them.  The top 10% are doing REALLY good helping run all these scams.

And, the top 20% aren't doing badly either.   If you took out the top 0.5% - and their scams - how many worthless people in the top 20% would have to find a real job?

debtor of last resort's picture

Why do they need Carney? They've got Big Ben already.

strangeglove's picture
The USA's 2-Tier Economy - DC (And Everyone Else)

 

See what I did there?

LawsofPhysics's picture

Yes, definitely a trend here.  Don't forget Jew York and everybody else.

Sofa King Confused's picture

London, DC and Jew York.  Imagine how the world be if they all got hit by an asteroid about a half mile wide.

NOTaREALmerican's picture

Yeah.   And NYC, SF, LA, & Miami too.    These places are where the most-fit member of society are living.

TruthInSunshine's picture

I've been talking about this for YEARS.

Go to the U.K. And look at the difference in income and living standards between London & the rest of the U.K. - it's too vast to convey in words, so seeing the contrast in real life is the only way to appreciate the extent of the difference. A "middle class" house in much of the U.K. is incredibly expensive given that it's a total shithole. And you should see what the working class paid for food, energy and the rest of their necessities.

In the U.S., the taxpayer-supported corridor of the D.C.-NoVa-Maryland (full of federal "workers," government contractors, lobbyists, law firms, etc.*) & the parasitic, taxpayer-sucking "banks" & wealth destroying financial firms of Wall Street on Manhattan (both areas draining the rest of the nation) are our equivalent of the differences between London & the rest of the U.K.

*There are 22,000,000 government employees at the federal, state & local levels (that we know of; this doesn't include "contractors," either), many of whom have worked one or more government jobs previously, and are "double stacked" (collecting pension from prior government job while drawing salary from current government job, which is more common than many "private citizen plebes" would believe).

At the federal level, the AVERAGE GOVERNMENT EMPLOYEE SALARY, NOT INCLUDING BENEFITS = $88,000.00

Average salaries for state & local government employees runs closer to $57,000, though the range is very wide.

Nearly all government employees are unionized and receive generous pre and post-retirement fringe benefits.

Does anyone know how many of these 22,000,000 workers, drawing a collective taxpayer derived salary of 1.7 trillion USD annually, are "essential?"

How about minimally "productive," or "useful?"

They're sucking the republic and all private sector productive members dry - like a massive parasite on a host, threatening to kill the host (literally).

Think about it: In USSA-Amerika .dot.gov (USSA), 1 out of every 6.9 Americans with a job is employed by a federal, state or local unit of government (not including enlisted military personnel or government contractors).

The republic is being bled to death by government bureaucracy & the bankers.

centerline's picture

And you haven't even mentioned the general promises/social safety nets... SS, Medicare, Medicade, UI, disability, SNAP, etc.

Not sustainable.  Therefore, wont be sustained.  Just a question of who gets screwed first, second, third... and by how much.  OR... do they try to hold it all together until it just snaps all at once. 

LawsofPhysics's picture

Of course, especially since financial "products" of mass destruction are a major part of the GDP and are all "manifactured" in London.

Say it with me; Roll the motherfucking guillotines already...

DaddyO's picture

Tyler,

Would Vichy DC be a great substitute for London for the same article?

DaddyO

Max Damage's picture

Yup London contributes Fuck all to the UK. All finance which has bankrupted the country. We need the suicide rate to rocket in London.

London has destroyed the UK with its debt and finance exporting jobs abroad and enslaving everyone in debt

As per Wall street they are a set of Twats

css1971's picture

The difference between London and the rest of the UK is how I finally woke up to what is the reality of our economic system.

For those who haven't been to the UK, the charts pretty much describe what you'll see. All the money is in London, the rest of the UK is an economic wasteland; north of Watford getting worse the further north you go. The City has sucked dry what was left over from the British Empire.

You see, it is far more profitable to engage in pyramid scams in The City or in housing bubbles than it is to invest in small businesses, technical innovations, infrastructure etc. The UK used to be... actually still is, a hotbed of innovation. The problem is getting past the inventor stage. Simply too risky when you can make 15% a year investing in property.

Then there are the politicians who are bought and paid for by The City. Helloooo British Citizens, your former Prime Minister Tony Blair works for JP Morgan. WAKE THE FUCK UP!

The people of the UK as a whole would be far better off without The City of London. They are too terrified their house will reduce in value though.

BruntFCA's picture

Haha.

Great post. I used to work for a big blue chip firm, we ended up closing almost all of our offices outside of London. Those offices simply made pennies compared to the London operations. Worse a few dudes in London could rack up more business in 2 days walking around town than a month of endless graft outside of town.

What you say about the property prices is spot on as well. People are terrified of any asset bubble pop. The UK does have some things going for it though. Given that the place is so small, it's *much* more difficult for the elites to hide from any shitstorm than it is in the US.

TruthInSunshine's picture

I defer to css on the accurate specifics of how inherently and deeply rooted the divide is between London & the rest of the U.K., because he obviously lives there &, IMO, he knows very much what he speaks of (and is able to convey these things in great, accurate detail).

I post what I do about London and the U.K. only because I have been privileged and fortunate enough to have traveled overseas often over the last decade or so, and, having been to London and other portions of the U.K. many times, find most Americans clueless as to things like the extremely high cost of living, the very unequal distribution of wealth (with London having what I'd consider to represent the rot of a declining Rome-like empire, as New York City and/or D.C. are to the U.S.) & the complete and total takeover of the U.K. by the banks & "make nothing of substance" financial firms.

CitizenPete's picture

NEED MOAR JUMPERS

NoWayJose's picture

I remember seeing one of those cartoon maps of the United States.  It basically had New York, Boston, Los Angeles, San Francisco, Lake Wobegon, and a lot of desert.  It would be a great economic map of the United States as well.

The real issue that the people (government?) need to look at is 'Why is this 1% doing so well, and where are they getting this money'?  I used to be against punitive taxes on 'the rich', but now I am thinking it may be a worthwhile thing.

NOTaREALmerican's picture

Re: 'Why is this 1% doing so well, and where are they getting this money'?

Well,  first you've got to somehow convince the "conservatives" that the top 1% isn't actually just federal workers and "those people".    

Then, you've got to figure out how - assuming you had this tax - the liberals wouldn't take the extra loot and make the government bigger which means the loot just flows back to the top 1%.

That's the real problem with our political system.   The Red and Blue Team know the voters actually are hopeless dumbasses and are simply screwing them.   There's really no solution, they deserve it.

Save_America1st's picture

The District of Criminals....and everyone else...

D.C.:  full of scumbag MUTANTS

M.arxist

U.topian

T.reasonous

A.uthoritarian

N.efarious

T.yrannical

S.ociopaths

NOTaREALmerican's picture

Re: M.arxist

And don't forget all the "conservatives" leaching off of:  Big-Ag, Big-MIC, Big-Road, Big-Water, Big-Airport, Big-Energy, Big-House, Big-Fin, Big-OldFart, Big-OldFartHealthcare, Big-AntiDrug, & Big-PoliceState .

superflex's picture

Doesn't it get old waking up every day, looking in the mirror with dreary, bloodshot eyes and seeing a broken record, total douche in the reflection?

pashley1411's picture

A more accurate chart than comparing London's GNP to the other British regions is to compare the UK financial sector's GNP to the GNP of all other sectors in Britain.   London simply standing, in this article, as a proxy for the financial sector.

With the entire weight of the British monetary, law making, and enforcement, bureaucracy, standing fully behind the companies (and profits) of the financial sector, of course that sector would become outsized.

And an even most useful chart would be Britsh GNP; pre, and post, the coming financial crash as the pound is rehypothecated to zero.   That would be the cat's meow.

 

August's picture

As Singapore divorced Maylasia, perhaps London should divorce the remainder of the Benighted Kingdom, dispensing with all those useless small towns, farms and shit.

TruthInSunshine's picture

Why would London do that? The entirety of the British Isles are a form of sustenance for the elite, where the people who actually work for a living are nearly unanimously turned into perpetual debt serfs, paying a huge % of what they earn in exchange for their labor over their lifetime to London in the form of tribute.

LMAOLORI's picture

 

 

I found this interesting Im not sure how it works in the UK but in the U.S. supposedly the Fed isn't political (but I believe thats a lie)

Bank of England policymaker suggests it could raise rates before the General Election in May 2015
smacker's picture

The Bank of England - like all other Civil Servants - is supposedly non-political.

The BoE is also officially independent of government but many people believe otherwise.

None of that prevents a government in office appointing its own cronies into positions of power/influence.

Blair was known to have stuffed the Establishment and quangos with cronies from the Left. Most of them utterly incompetent.

mumbo_jumbo's picture

"London’s share of U.K. output measured by gross value added"

 

value added? isn't that the epicenter of financialization for Europe? financialization adds no fucking "value" it only adds zeros to the price of things.