Question to the Cabinet Office:

To ask His Majesty's Government, further to the Written Answer by Baroness Anderson of Stoke-on-Trent on 23 July (HL9313), whether they can identify the reasons as to why London’s economy is 28.5 per cent more productive on average than the rest of the United Kingdom.

The information requested falls under the remit of the UK Statistics Authority.

Please see the letter below from the National Statistician and Chief Executive of the UK Statistics Authority.

The Lord Birt

House of Lords

London

SW1A 0PW

4 September 2025

Dear Lord Birt,

As Acting National Statistician, I am responding to your Parliamentary Question asking, further to the Written Answer by Baroness Anderson of Stoke-on-Trent on 23 July (HL9313), whether the reasons as to why London’s economy is 28.5 per cent more productive on average than the rest of the United Kingdom can be identified (HL9939).

London is home to a high proportion of knowledge-intensive sectors such as financial services, insurance, and professional, scientific, and technical industries, all of which drive higher levels of productivity. There is evidence that London, like other major cities, benefits from an agglomeration effect, whereby the close proximity of a diverse mix of businesses, highly skilled labour, and major institutions fuels knowledge spillovers, collaboration, and innovation which enhance overall economic output. 1

London-based firms also consistently outperform their regional peers, even within the same industries, with firms benefitting from access to a large highly skilled labour market and a well-developed infrastructure and also from high competition between firms driving business dynamism.

This same pattern is found globally, with the largest cities typically having higher productivity levels compared with other areas due to these agglomeration impacts.

Yours sincerely,

Emma Rourke

1 https://whatworksgrowth.org/insights/understanding-agglomeration/