London Economy Set to Grow - Reach London's Shoppers and Businesses with London Letterbox Marketing

The latest 'London Economic Outlook' from the Greater London Authority indicates that the London economy continues its post recession expansion. Even during the recent recession it seems that London just outperformed the rest of the UK – a change from previous recessions. Recent economic indicators continue to show a recovery in the London economy, with positive public transport usage and business surveys showing activity picking up. However, consumer confidence remains extremely weak with real wage growth being squeezed by inflation and higher taxes dampening consumption. Employment growth is expected over the next few years with increases in private sector employment outweighing public sector job losses. Unemployment however is unlikely to come down quickly. The Government’s fiscal retrenchment is likely to dampen economic growth slightly in the short run but will rebuild market confidence in the country’s finances and will help to provide longer run stability. Fiscal tightening also puts downward pressure on market interest rates, which should encourage private sector investment. A large downside risk to the recovery remains the fragile nature of many developed countries public finances and the possibility of a worsening sovereign debt/financial crisis in the Eurozone that would trigger a huge fall in investor confidence. Sovereign debt defaults or even restructures would put great pressure on the still strained balance sheets of many banks. Inflation is likely to remain above the Bank of England’s 2 per cent target until 2012 due to the rise in VAT in January 2011, Sterling’s past depreciation and increasing commodity prices. There is a risk that at some point the Bank of England will have to raise interest rates sharply and quickly but still the most likely interest rate path is one of gradual increases towards more normal levels over the next couple of years. Sterling continues to remain weak and this should provide support to the economy from import substitution and improved export competitiveness. This will continue to benefit London’s tourism sector and encourage inward foreign investment. Overall this recovery will be led by private sector investment and trade rather than by public sector and household consumption. This rebalancing of the economy is required but will not be an easy one for consumers. To find out more call London Letterbox Marketing on 0208 940 0666 or contact us on Sales@londonletterboxmaketing.co.uk