London economy proving resilient

London is outperforming the wider UK economy and could avoid a recession, a new report suggests.

An index of business output in London compiled by NatWest climbed to 50.2 in December from 48.2, indicating that the capital’s economy is growing, City A.M. reports.

Across the UK the same index dropped below the 50-point threshold that separates growth and contraction as activity shrank for the fifth month in a row.

The Bank of England has forecast that the UK will fall into a long recession which will continue into the first half of 2024.

There are some positive signs, however.

Energy prices have dropped back from the peak seen last year and are expected to fall below the £2,500 price cap in the summer. Meanwhile, overall inflation is predicted to continue falling over the course of this year.

NatWest chairman Sir Howard Davies, a former deputy governor at the Bank of England, told the BBC’s Sunday with Laura Kuenssberg programme that many people saved money during the pandemic, so they have a cushion to help sustain their spending.

“The simplest thing to think about the economy is it’s flatlining at present,” Davies said.