This report charts the rise of London's headquarter economy. It finds that the city remains a top destination for company headquarters but sets out how policymakers must respond to a number of challenges which threaten London’s future as a global HQ centre.
Headquarters and related functions have been a fast-expanding source of employment and economic output in London, and the UK, for the last decade.
London is a top destination for HQs
- London attracts more headquarters investment projects than other global cities including Singapore, Dubai, Hong Kong, Dublin and Paris.
- The number of people working in London’s head offices is also growing; rising from 30,000 to 67,000 between 2008 and 2016.
- The biggest multinationals have overwhelmingly chosen London as their European HQ: London and the Wider South East host 55 per cent of the world’s largest 500 companies’ European HQs.
Why choose London?
HQ location decisions are motivated by a range of factors, but the most influential factor for businesses is access to talent. This includes the availability of homegrown talent, openness to international immigrants and the free-flow of business visitors. Taxation and business regulation are also important factors, but are often overstated.
While London currently fares well on talent and regulation, its status as a major centre for headquarters is far from secure. Both business visits and business spend in London fell by five per cent between 2015-2017, their first fall since 2009. Tightening immigration policies post-Brexit may slow the flow of workers. At the same time, the city is in the grip of an affordability crisis.
London must take action to enhance the city’s attractiveness to headquarters.
Sustain London’s reputation for openness and its talented and innovative workforce
London government should continue to lobby for an immigration policy that supports London’s HQ economy alongside other sectors, and should seek more regional control of immigration policy if this cannot be achieved nationally. National government should preserve the UK’s business climate and labour laws, while spearheading improvements in skills provision and education.
Act decisively on housing and transport investment
London must work to tackle its affordable housing problem and continue to lobby national government for more investment in housing and transport and logistics infrastructure.