Sadiq Khan, the Mayor of London, has launched an extensive initiative intended to increase the capital's economy by over £100 billion by the year 2035, dubbed the London Growth Plan.

During the announcement, Khan stated that hundreds of millions of pounds in devolved funding would be allocated to revitalize productivity growth in London, aiming to restore it to pre-financial crisis levels experienced before 2008.

Key aspects of the plan target various sectors, including housing, transportation, training, high streets, and business support, with the objective of enhancing the efficiency of London as the UK's primary economic engine.

Notably, the plan outlines the allocation of more than £300 million from central government skills funding to local programs, which are expected to create over 150,000 jobs focusing on fair pay and quality work.

This initiative is part of a commitment made by Khan during his campaign for re-election to a historic third term last May.

Infrastructure improvements are also integral to the growth strategy, featuring upgrades to London’s public transportation network.

Proposed enhancements include the extension of the Docklands Light Railway to Thamesmead in south-east London, the southern extension of the Bakerloo Underground line to Lewisham, and the establishment of a West London Orbital overground service utilizing existing tracks.

Khan’s objective of adding £107 billion to the London economy by 2035 hinges on revitalizing productivity growth, which has experienced a significant slowdown in the UK and other advanced economies since 2008. Productivity growth, an important economic metric that gauges output per hour worked, is essential for raising living standards as it helps employers increase wages.

Historically, London’s productivity grew by an average of approximately 3.16% annually between 1998 and 2007. However, this rate fell dramatically to an average of just 0.12% from 2008 to 2022. To meet Khan's projections, productivity would need to rebound to an average growth of 2% annually from 2025 to 2035. Achieving this goal would result in an estimated additional £11,000 for the nearly 9 million residents of London and generate £27.5 billion in taxes for the Treasury by 2035.

Despite being the most productive region in the UK—over 25% above the national average—London has faced a notable decline in growth rates over the past 15 years.

Analysis shows that real productivity in the capital increased by only 1.5% from 2008 to 2021, compared to a broader national growth of 6.9% during the same period.

National productivity levels have also been decreasing recently, with forecasts from the Office for Budget Responsibility predicting a trend growth rate of merely 1.25% by 2029. Recent figures indicate that London’s productivity experienced the steepest decline of any region in 2022, falling by 0.9%.

Khan emphasized that the growth plan represents a critical opportunity to accelerate economic growth and unlock the city's full potential, benefiting all residents and the broader national economy.

He noted that tangible benefits of growth are essential for communities, stating that the aim was to ensure economic improvements reach every area of the city, enhancing living standards, increasing disposable income, and enabling further investment in public services.