Work and Pay

London's booming - the capital is no longer the UK's unemployment hotspot

  • Published: Mar 19, 2013
  • Author: Tom MacInnes
  • Category: Work and Pay

Last week, the Office for National Statistics released its estimates of economic growth across the regions and countries of the UK. Accompanying these stats was an infographic showing just how far London was outperforming the rest of the UK economically. Economic growth was higher, the number of jobs had grown more quickly, the experience of the recession had been less severe. One interesting effect of these changes is that, in terms of unemployment, London now looks more like the rest of the country while the rest of the south and east looks less like so.

Why is that? It’s important to remember that London still has high levels of poverty and unemployment. The most recent employment statistics show that, of all the regions and countries in the UK, only the North East and Yorkshire and the Humber have higher unemployment rates than London. This is actually a relative improvement for London compared to other parts of the country.

The graph below shows the unemployment rates in different parts of the UK in 2002. The rates are for people resident in the region. This is important when we look at London, as it has a huge commuting radius, encompassing large parts of the south and east of England. The bars are ranked highest to lowest, and we see that London, at 6.9%, had the highest unemployment rate in the UK. Next highest was the North East, then Scotland and Northern Ireland. The South East, South West and East of England, at the other end of the scale, were notably lower than everywhere else.

The graph is interactive – if you click on a year  the bars will change to show the level for that year. We've chosen 2002, 2007, 2010, 2011 and 2012 to give a medium term view and more of a close-up of the last few years.  The order of the bars stays the same, though, so London is always on the far left, meaning we can compare how different regions have fared compared to each other over time.

Click here to view graph on mobile

There are lots of different changes to look at, but there’s two or three worth emphasising. Firstly, until 2007 London had the highest unemployment rate of anywhere in the UK. Since the recession, however, that unfortunate position is now held by the North East. Yorkshire and Humber is now second, which is especially striking given that it had a lower than average unemployment rate in 2002.

Secondly, while unemployment has risen across the UK, the rises in Scotland and Northern Ireland have been smaller than elsewhere. So much so, that unemployment is now lower in those countries than anywhere outside the south and east of England. This was not the case a decade ago. This change mainly occurred prior to the recession.

Finally, the unemployment rate fell almost everywhere between 2011 and 2012. But everywhere except the south and east of England still has a higher unemployment rate than the London did in 2002. In fact, the gap between the south and east and the rest of England and Wales is greater now than a decade ago.

So London used to have the highest unemployment rate in the UK and it is now more like the level in North and Midlands. The South East, South West and East of England always had the lowest unemployment rate and the gap from the rest of England has grown. London's "boom" has benefited the surrounding regions as well as London itself. 

Over the next few months, we will be working with the Trust for London to look more closely at these changes within the capital. If the changes of the last decade have been uneven across the country, have they been equally uneven across London?

Unfortunately, this visualisation cannot be viewed in older versions of Internet Explorer (IE 8 and earlier). You can download a newer version here .  Google ChromeFirefox and Safari also work fine. 

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