Commercial construction work in central London generates twice the economic benefits and supports almost twice as many jobs outside London as it does in the capital, according to new research by PwC.
While work was found to benefit London by £600m annually, the contribution to regional economies stood at £1.1bn.
And while 12,200 jobs were supported in the capital, 22,400 were supported in the regions.
The lion’s share of this came from the South-east, which saw £280m in gross value added and almost 7,000 jobs supported annually.
The East of England saw £127m generated and 3,050 jobs supported, with Yorkshire & Humberside and the West Midlands benefiting by around £50m each on the back of strong M&E and structural steel supply, respectively.
This could be increased by upping domestic expenditure on goods and services where the UK lacks capacity, such as cladding, lifts and machinery, according to the report.
A further £467m and 7,360 jobs were generated through “regional spillovers”.
PwC found the “multiplier effect” was generated because 84 per cent of direct investment in central London office developments was spent in the UK.
The report, commissioned by London First, analysed expenditure, supply chain figures and employee spending from British Land, Cadogan Estates, Canary Wharf Group, the Crown Estate, Derwent London, Great Portland Estates, Grosvenor, King’s Cross Central Limited Partnership and Land Securities.
London First chief executive Baroness Jo Valentine said: “The value of investment in London is huge in terms of generating jobs and economic benefits in London itself, but the knock-on contribution to regional economies is more impressive and shows the boost that London businesses provide to the rest of the UK.
“The fact that it can attract this private sector investment, against competition from other international hubs such as New York or Dubai, is a sign of continuing global confidence in London and its future growth.
“But it’s vital that the government makes a similar commitment to public sector investment in the city’s infrastructure – particularly its transport system.”
The office developments covered by this study make up less than 10 per cent of total London development.
A sample of residential projects found that similar multiplier effects were generated through central London housebuilding.
British Property Federation chief executive Liz Peace welcomed the report, saying: “This research confirms what we have known for some time: that the construction industry – and, indeed, parts of manufacturing and other services – rely on a healthy property development industry to drive orders, work and jobs.
“The government’s focus on getting construction kick-started to help heal the economy is spot on.
“But if it is to succeed, it is vital that everyone involved recognises the crucial role played by property developers and investors: these are the businesses that feed the construction industry when they take on risk by committing to develop and regenerate our built environment.
“Talking to construction firms alone is not enough.”