Regional GVA

Graham_Devon

Generali wrote: »

That certainly wasn't my point.

My point was that it is truly amazing how successful London is compared to the rest of a fairly small country. How can parts of London (let's ignore The City) have a GVA per head factors larger than parts of Wales and NE England?

There must be lessons that can be learned by Government and also by the people living in those parts of the world to enable them to kick on.

The high paying jobs and high asset values I should think.

The stamp duty paid in London will dwarf that of the stamp duty paid in wales. Simply down to asset values.

Income tax will also dwarf wales. Afterall, Wales largest employer will see most employees earn so little they won't even pay income tax.

cells

GDP growth should be reported on a regional basis, then maybe it would be more clear to the public and politicians what is happening

Over the last 17 years London has been booming while the rest of the country was almost flat growing a very weak ~1% a year.

Generali

Graham_Devon wrote: »

The high paying jobs and high asset values I should think.

The stamp duty paid in London will dwarf that of the stamp duty paid in wales. Simply down to asset values.

Income tax will also dwarf wales. Afterall, Wales largest employer will see most employees earn so little they won't even pay income tax.

Asset values and taxes aren't included in GVA.

GVA is a measure of the cost of business sales less the cost of inputs to business.

If Selfridges Food Hall buys a chicken from a farmer in Devon for a quid and sells it for a tenner then GVA is £9.

If the house that the manager of Selfridges Food Hall's house increases in value by £1,000,000 as a result of the roaring economy for excellent Devonshire chooks then GVA increases by £0.

GVA is a way of measuring GDP.

Graham_Devon

Generali wrote: »

Asset values and taxes aren't included in GVA.

The very first page of the excel file linked to shows what's included?

GVA(I) comprises Compensation of Employees , plus Gross Operating Surplus, plus Mixed Income, plus Taxes on Production, less Subsidies on Production.

It then breaks those down. Rental income, taxes on buildings, taxes on land etc all appear to be included.

I'm just going on what the file says?

cells

Graham_Devon wrote: »

The very first page of the excel file linked to shows what's included?

It then breaks those down. Rental income, taxes on buildings, taxes on land etc all appear to be included.

I'm just going on what the file says?

rents and imputed rents are a part of GDP

But rents and imputed rents are not devoid of the economy around them. They only go up if wealth and economic activity pushes them up.

And this is not so much a story about London having a higher GDP vs rUK. Its about that GDP having grown more. So its not about rents being higher, its about them growing even faster than the rUK

Generali

Graham_Devon wrote: »

The very first page of the excel file linked to shows what's included?



It then breaks those down. Rental income, taxes on buildings, taxes on land etc all appear to be included.

My apologies, gross taxation isn't a factor. Economists tend to look at the net tax position and that is my mistake entirely.

You are absolutely correct to state that higher taxes in London and lower taxes in Wales (other parts of the UK are available) will reduce GVA stats in London and flatter it in Wales. Tax and spend differences make it look like London isn't pulling its weight anything like as much as it is and makes the regions look to be failing less than they are. Thank you for bringing that to our attention.

Asset price changes do not have any direct impact on GVA as I stated.

cells

The regions probably behave in cycles of their own to some degree

It looks like 2000-2005 was a broadly even boom (that could be that London was surpressed by the doc dom crash or that everyone was doing well. Its definitly a time the midlands and north house prices boomed)

From 2005-2014 pretty much only London was in boom mode while most the rest of the country was anemic growth. This tallies with house price growth where London prices have boomed from 2005-2014 while much of the rest of the country was flat

cells

Generali wrote: »

My apologies, gross taxation isn't a factor. Economists tend to look at the net tax position and that is my mistake entirely.

You are absolutely correct to state that higher taxes in London and lower taxes in Wales (other parts of the UK are available) will reduce GVA stats in London and flatter it in Wales. Tax and spend differences make it look like London isn't pulling its weight anything like as much as it is and makes the regions look to be failing less than they are. Thank you for bringing that to our attention.

Asset price changes do not have any direct impact on GVA as I stated.

London is flattered by some degree of population shift.
That is to say we may attribute 30% of London GDP to its 8.5 million people but its probably more like 30% of London GDP to its 8.5 million population plus X million virtual households who commute in for work

Also maybe there is some bad accounting. For instance I own a business registered in London but it does most its trade outside of London. Where is this value added attributed to?

But even trying to account for that it looks like London has done v.well over the last 20 years while the rest of the regions have looked on

cells

im gona kick this to the top.

London GVA up 24% in just 4 years (2010-2014) or 5.5% annual nominal growth.......what recession?

Generali

cells wrote: »

im gona kick this to the top.

London GVA up 24% in just 4 years (2010-2014) or 5.5% annual nominal growth.......what recession?

I don't have the GDP deflator to hand which is what should be used but using the RPI as a proxy that was c. 15% so only about 9% growth in 4 years.

Even inflation at relatively low levels has a big difference on real versus nominal growth.

Still not bad considering that your period includes a brutal recession particularly impacting one of London's biggest industries, banking.