London (20 January 2020): Midtown has overtaken the West End in a ranking of London’s most important economic hubs. The area flanked by the West End and the City of London is now second only to the City in terms of economic output, according to new research by the economic consultancy Hatch Regeneris.
Midtown’s economy is now worth £20.5bn a year, compared to £18.9bn for the West End, according to data for 2019. Only the City’s economy, worth an approximate £72.8bn annually, is now larger than Midtown’s in London.
Hatch forecasts that the gap between Midtown and the West End will widen over the next five years. By 2025, Midtown’s economy will be worth £24.9bn, compared to £22.7bn for the West End. By then, the City economy will be valued at £88.1bn.
Hatch’s research was commissioned by Midtown BID, a business network for 400 companies based in the area. Midtown covers an area of London that comprises most of the postcode districts of WC1 and EC1.
The basis for the estimates is economic output data for local authority areas across the country published by the Office for National Statistics (ONS), the producer of official statistics for the UK.
The City of London, Midtown and the West End are London’s three most important business hubs by far – and as such, are vitally important contributors to the national economy. Other business areas in London such as Victoria, London Bridge, the South Bank and Paddington are considerably smaller in terms of their economic output, according to Hatch.
Midtown’s progress comes against the backdrop of increased investment in the capital’s knowledge economy, which is increasingly centred on Midtown. For decades, the area known as Midtown was famous for its legal sector, clustered around Holborn and Chancery Lane, and the British Museum in Bloomsbury. Today, while Midtown’s Inns of Court and museums remain world-renowned, its economic base is considerably more diverse. Hatch has found that Midtown has more creative sector jobs than Shoreditch – only Soho supports more – while the decisions of Amazon, Google and LinkedIn to base themselves in Midtown reflects the area’s rapidly growing technology sector.
Today, almost one in three jobs (32%) in Midtown is in professional and financial services, compared to 25% in the West End. Retail continues to dominate in the West End – providing around 17% of all jobs, compared to 7% in Midtown.
The larger proportion of higher value jobs in Midtown is reflected in employee productivity data also released today by Hatch.
There are more workers in the West End than Midtown – 186,000 compared to 175,000, according to Hatch. But workers in Midtown on average generate £117,000 annually in terms of their economic output, versus £101,000 per employee in the West End. The City’s 549,000 workers generate about £133,000 per employee.
By 2025, Midtown’s productivity is forecast by Hatch to reach £136,000 per worker, in line with the levels seen in the City by then.
Midtown’s future growth will be supported by the Crossrail project. London’s five airports will all be reachable within 45 minutes of Farringdon Station, connectivity to greater London and the southeast will be enhanced and demand for space in Midtown will increase.
Alexander Jan, Chief Economist for Arup, the global built environment consultancy, and Chair of Midtown BID, says: “The emergence of Midtown as London’s second most important economic hub after the City offers a lesson for the UK economy as a whole as the Brexit transition begins.
“We can take pride in the Midtown business improvement district (BID) area being home to a highly diversified economy with a spatial concentration of the sorts of high-value, knowledge-based jobs that will improve the UK’s productivity and competitiveness over the long term – and help to pay for vital public services across the UK from the taxes that are generated. The success of Midtown is also a testament to the close collaboration and partnership that now exists between the public sector and the private sector here.”
Daniel Lindsay, Director, Hatch, adds: “We have been monitoring the economic performance of Midtown since 2017 and our previous analysis indicated that the area performed in line with the West End. This new data shows that strong employment growth in Midtown across a diverse range of high value sectors has resulted in productivity growth outpacing many other parts of London. This has resulted in Midtown’s economic output overtaking the West End. The area is going from strength to strength and if current trends continue, the productivity across Midtown will increase to the levels expected in the City of London by 2025.”
Economic output in the Hatch study is based on ONS data on Gross Value Added, a measure of the goods and services produced in a particular local authority or district. GVA output is calculated by multiplying GVA per employee by the total number of employees in an area.
The areas covered reflect the respective Business Improvement Districts (BIDs) for the West End and Midtown.