London’s economy has been transformed, and is the dynamo of growth in the UK, though inequality and poverty persist in the capital. This report looks at how automation and other factors may combine to disrupt London’s economy in coming years, and at how London’s workforce will be able to adapt to change.

Disruption and transformation are nothing new for London. In the past 70 years, the city has been transformed from a declining imperial capital to one of a handful of “global cities” – command and control centres where the global movement of capital, goods and information is managed and organised. ¹

After rapid deindustrialisation and the decline of dock-based industries, London found a new role as a global financial capital following the deregulatory “big bang” of 1987, and as a global cultural and educational centre in the following years. Population decline in the post-war years – driven by public policy and a flight to the suburbs – slowed in the 1980s before reversing in the early 1990s. As a result, by early 2015 London’s population had exceeded its pre-war total of 8.6 million people.

Today, London has around 5.8 million workers – one-sixth of the UK total – and generates around £400 billion every year in economic activity. ²

Figure 1 shows the sectors and occupations that make up London’s economy today.

London has proved resilient to setbacks such as the financial crisis of the late 2000s, and has continued to grow despite the uncertainties following the EU referendum in 2016. Nonetheless, the economy has not worked for everyone, and London still has one of the highest regional unemployment rates in the UK as well as high rates of in-work poverty and child poverty – reflecting the impact of London’s cost of living even upon those in employment.

Our report examines some of the factors likely to transform London’s economy in coming years, focusing on automation – sometimes heralded as the catalyst for a new industrial revolution – but also on some of the other factors that may combine to intensify or mitigate automation’s effects.

Against this backdrop, our report examines some of the factors likely to transform London’s economy in coming years, focusing on automation – sometimes heralded as the catalyst for a new industrial revolution – but also on some of the other factors that may combine to intensify or mitigate automation’s effects. It looks at the potential impact on the workforce in different sectors; the opportunities that will arise from the changes; the factors that will help workers and employers to weather the storm and take advantage of these opportunities; and what government agencies and employers can do now to ensure resilience, prosperity and fairness in the decades to come.

Research has consisted of desk-based research, including fresh analysis of bespoke data provided to Centre for London by the Office for National Statistics (ONS). The team also held two roundtables to discuss findings with business leaders from the finance, real estate, hospitality, transport, retail and business service sectors.

Chapter 1 discusses three disrupting factors (automation, Brexit and low pay) as well as three potentially mitigating ones (new job creation, skills and cluster strength). Chapter 2 shows the impact that each of these factors is expected to have on different industries in London. Chapter 3 summarises the findings and discusses implications for businesses, for workers and for public policy.

Throughout this report we have used a orange, yellow, green traffic light system to indicate which sectors are at high, medium and low risk of disruption over the next 20 years. For mitigation, orange indicates low potential for mitigation, yellow indicates medium potential and green indicates high potential. This has been developed to give an easily-digestible overview of findings.