The five boroughs of the South London Partnerships are often seen as residential and suburban – sometimes considered a ‘dormitory’ area of the capital.  But in fact they cover a significant sub-regional economy.

Before the pandemic, its key features were:

• generated £32 billion for the UK economy in 2019 (2018 prices)
• 518,500 jobs – with wholesale and retail, human health and social work, professional services, administrative and support services, and education our biggest sectors
• extremely high skills levels with 51% of residents being educated to degree level or above – though balanced with some pockets of significant skills deprivation
• six times as many start-ups as the London average and their survival rate is better than the London average
• major businesses based in our boroughs include Paypal, Ebay, Haymarket, Reed Business Information, Mott MacDonald, Subsea7, Dearman, CIPD, Lidl and Unilever – but proportionately fewer large firms and over 93% of enterprises are ‘micro’ firms
• major town centres in Richmond, Wimbledon, Sutton, Kingston and Croydon

But even before the COVID crisis, our sub-regional economy punched below its weight.  It generated around half the GVA per capita of the London average (£27,200 compared to £50,800 in 2019, at 2018 prices).  One third of this productivity gap is driven by the sectoral composition of our businesses, with a greater share of less productive sectors and underrepresentation of higher-value sectors.  Two thirds of the productivity gap are driven by relative underperformance within our sectors (particularly those forecast for fastest future growth).

Many of our residents benefit from access to the wider London jobs market and business opportunities.  This contributes to much higher median weekly earnings for our residents than our sub-regional employees (£778.0 pw compared to £583.6 pw).  Our residents’ earnings therefore significantly exceed those for London (£716.4 pw) and the UK (£566.4 pw).  But our workers’ earnings compare poorly to the London median (£778.5 pw).

Our boroughs therefore want to support and create the conditions for stronger local and sub-regional economic activity.

Oxford Economics has considered the impact of COVID on our sub-regional economy:

• with a drop of 12.0% in 2020, our area is estimated to have seen a sharper fall in GVA than London (-10.4%) and the UK economy (-11.4%)
• we are facing the loss of nearly 25,000 jobs – 9,100 in 2020 and 15,700 in 2021
• hospitality has been particularly exposed to the crisis – accommodation & food have seen GVA almost halve in 2020 alone and will account for over a quarter of our job loses.  Arts, entertainment & recreation and other services will see similarly sharp falls in output.  Jobs are also expected to be lost in administration & support services, professional services, and wholesale & retail.

They have also considered the outlook for the SLP economy over the next ten years:

• with forecast growth of 4.9% in 2021 and 6.3% in 2022, our GVA is only expected to return to 2019 levels in 2023 and our sub-region is expected to continue to lag London growth for the rest of the decade (average 1.1% pa compared to 1.5% pa)
• information & communication are forecast to be our fastest growing sector (1.9% pa), with relatively strong growth in other business services, such as professional and administrative & support services.  Other sectors expected to be faster growing are ones associated with serving our local populations, such as real estate, human health & social work, utilities & water supply
• an additional 21,200 jobs are forecast over this period – less than half the 51,000 additional jobs over the decade before the crisis
• one third of additional jobs are forecast to come in human health & social work, with administrative & support services, professional services and some recovery in arts, entertainment & recreation forecast.  But contraction is anticipated in manufacturing and accommodation & food services.

The pandemic shock is significant and it will accelerate some changes, including working behaviours and increasing demand in the digital economy.  However, it is not expected to significantly alter the composition of our economy or the drivers for growth.

In the light of this analysis, we are refocussing our strategy and priorities for collaboration – on economy, skills and employment, and infrastructure, as well as ensuring our funded programmes (details under the relevant thematic headings) are orientated to support economic recovery across the sub-region.  We are also feeding into the London Economic Recovery work to contribute to the wider economic recovery of the capital and ensure that work on the 9 London Recovery Missions reflects the contribution and needs of SLP residents, communities and businesses.