London generates approximately 22 per cent of the UK's GDP. 841,000 private sector businesses were based in London at the start of 2013, more than in any other region or country in the UK. 18 per cent are in the professional, scientific and technical activities sector while 15 per cent are in the construction sector. Many of these are small and medium-sized enterprises.
London boroughs as countries with similar GDP PPP per capita
London produced in 2018 almost £500 billion (US$650 billion) or around 1/4 of UK GDP, while the economy of the London metropolitan area — the largest in Europe—generates about 1/3 of the UK's GDP or almost $1.0 trillion.
London shifted to a mostly service-based economy earlier than other European cities, particularly following the Second World War. A number of factors contribute to London's success as a service industry and business centre:
English being the native language and the dominant international language of business;
a business friendly environment (e.g. relatively low taxes for corporations and non-domiciled foreign individuals; in the City of London the local government is not elected by the resident population but instead by resident businesses – the City of London is a business democracy);
good transport infrastructure particularly its aviation industry;
Currently, over 85% (3.2 million) of the employed population of greater London works in the service industries. Another half a million employees resident in Greater London work in manufacturing and construction, almost equally divided between both.
A useful guide to the distribution of wealth across London is the cost of renting office space. Mayfair and St. James's are historically and currently the most expensive areas – approximately £146 per sq ft per annum. The least expensive commercial districts are Waterloo & Southwark and East London Tech City, a new, but growing hub of start up technology companies, also known as Silicon Roundabout – approximately £65 per sq ft per annum.
Domestic and international corporate headquarters
The London Stock Exchange is the most international stock exchange and the largest in Europe. More than half of the London Stock Exchange top 100 listed companies (the FTSE 100) and over 100 of Europe's 500 largest companies are headquartered in central London. Over 70% of the FTSE 100 are located within London's metropolitan area, and 75% of Fortune 500 companies have offices in London. According to research by Deloitte, "London has the most internationally diverse executive community in the world, attracting business leaders from 95 nationalities and with alumni working in 134 countries".
Financial services in London benefited from the UK's membership of the European Union, although this may end following the decision of the United Kingdom to leave the European Union. The position of London as a financial centre may be further enhanced by a free trade agreement between the UK and the USA.
The combination of lax regulation and London's financial institutions providing sophisticated methods to launder proceeds from criminal activity around the world, including those from drug trade, makes the City a global hub for illicit finance and London a safe haven for the world's malfeasants, according to research papers and reports published in the mid-2010s.
BT Centre, the headquarters of BT Group, in the City of London
Media companies are concentrated in London and the media distribution industry is London's second most competitive sector. The BBC is a key employer, other broadcasters also have headquarters around the city. Many national newspapers are edited in London, having traditionally been associated with Fleet Street in the City, they are now dispersed across the capital. Soho is the centre of London's post-production industry. Hollywood's links with the United Kingdom are centred on London, which contributes billions to the economy.
Tourism is one of London's prime industries. London is the most visited city in the world by international tourists with 18.8 million international visitors forecast in 2015, ahead of Bangkok (18.2 million) and Paris (16.1 million). Within the UK, London is home to the ten most-visited tourist attractions. Tourism employed the equivalent of 350,000 full-time workers in London in 2003, whilst annual expenditure by tourists is around £15bn.
A growing number of technology companies are based in London, notably in East London Tech City also known as Silicon Roundabout. Investment in London's technology sector was $2.28 billion in 2015, 69 per cent higher than the $1.3 billion raised in 2014. Since 2010, London-based technology companies have collectively raised $5.2 billion of venture capital funding. A report by EY highlighted the importance of London to the UK's FinTech industry in terms of availability of expertise and demand for services.
London is a major retail centre, and in 2010 had the highest non-food retail sales of any city in the world, with a total spend of around £64.2 billion. The UK's fashion industry, centred on London, contributes tens of billions to the economy.
London was named the city with the best real estate investment opportunities for foreign investors in 2014. Office development was at a four-year high in 2013 with 9.7 million sq ft across 71 schemes under construction.
A multibillion-pound 10-year construction programme has begun in Nine Elms on the South Bank of the river Thames in central London. This will develop the area from a semi-derelict, light industrial zone into a modern residential and business district. The programme includes regeneration of Battersea Power Station, construction of new embassies for the United States and the Netherlands, and regeneration of New Covent Garden Market which is the largest fresh produce market in the UK. Transport improvement plans include two new Northern line tube stations, riverbus piers, new bus services and a network of cycle lanes and footpaths. A new bridge across the river Thames will link Nine Elms to Pimlico on the opposite bank. Around 25,000 permanent jobs will be created once the new buildings are occupied and around 16,000 new homes.
Other large construction projects include Kings Cross Central and Paddington Waterside. In 2014, the government identified 20 new housing zones across London, and in February 2015 the development of the first nine zones was approved, which will create 28,000 new homes by 2025 from £260m of investment.
Crossrail, originally planned to open in 2018 but delayed until late 2020 or 2021, will be a new railway line running east to west through London and into the surrounding countryside. It will run on 118 km (73 mi) of track with a branch to Heathrow Airport. The main feature of the project is construction of 42 km (26 mi) of new tunnels connecting stations in central London including a branch to Canary Wharf in east London. It is Europe's biggest construction project with a £15 billion projected cost. An additional line, Crossrail 2, has been proposed.
Most of the streets of central London were laid out before cars were invented and London's road network is often congested. There is a £11.50/day congestion charge in Central London. The Ultra Low Emission Zone (ULEZ) adds an extra charge of £12.50/day for vehicles which do not meet Euro 4 standards for petrol and Euro 6 for diesel (which corresponds to vehicles made before 2007 and 2015 respectively. The ULEZ charge will be extended to the North and South Circular from October 2021.
There are a number of proposals for expanding airport capacity for London including expansion of London Heathrow Airport and expansion of Gatwick Airport. The principal argument in favour of airport expansion is to support economic growth in the UK by providing an international hub for air-transport links to fast-growing developing countries around the world. The Heathrow proposal expects to create 120,000 new jobs across the UK and bring economic benefits of more than £100 billion. It also anticipates boosting exports as a result of the expansion.
Once the largest port in the world, the Port of London is today the second-largest in the United Kingdom, handling 48 million tonnes of cargo each year. The port is not located in one area – it stretches along the tidal Thames, including central London, with many individual wharfs, docks, terminals and facilities built incrementally over the centuries. As with many similar historic European ports the bulk of activities has steadily moved downstream towards the open sea, as ships have grown larger and other city uses take up land closer to the city's centre. Today, much of the Port of London cargo passes through the Port of Tilbury, outside the boundary of Greater London.
London Gateway, the UK's newest container port, opened in 2013. The £1.5bn facility at Thurrock, Essex, is 20 miles (32 km) down the River Thames from London. It is expected to be able to handle 3.5 million containers a year. The development is forecast to create 27,000 jobs in London and the South East and contribute £2.4bn a year to its economy.
^"The Economic Benefits to the UK of EU Membership". European Movement. Retrieved 2 October 2014. By being a Member State of the European Union the United Kingdom is part of the world's largest single market – an economic zone larger than that of the USA and Japan combined with a total GDP of around £11 trillion. This single market of 500 million people provides a relatively level playing for British business to trade in. This enables not just free trade in terms of the absence of customs duties or tariffs but a common set of rules so that business does not have to comply with 27 different sets of regulations.
^"Press Conference by Kerry, British Foreign Secretary Hague". United Kingdom Foreign and Commonwealth Office, London: U.S. Department of State. 9 September 2013. Retrieved 8 December 2013. John Kerry: We are not only each other's largest investors in each of our countries, one to the other, but the fact is that every day almost one million people go to work in America for British companies that are in the United States, just as more than one million people go to work here in Great Britain for American companies that are here. So we are enormously tied together, obviously. And we are committed to making both the US–UK and the US–EU relationships even stronger drivers of our prosperity.