Stronger productivity growth across London’s ‘frontier’ industries could unlock up to £76bn additional economic output across the UK

New economic analysis by PwC UK shows London is primed to unlock accelerated economic growth across the ‘frontier’ industries of finance, technology, and science & research.  PwC UK’s Grow London report showcases how the Capital, with its highly skilled workforce, established capital raising pathways, clustered tech hubs, and institutional and regulatory stability, is an ideal location for these industries to thrive. If properly nurtured, PwC estimates productivity growth across these industries could deliver up to £40bn of additional annual gross value added (GVA) in London by 2030, and up to £76bn annually across the UK (inclusive of London).

A city with the key ingredients for growth

The report highlights that, benchmarked against a pool of 11 global peer cities, London is perfectly poised to cultivate industries which appear to hold the greatest productive potential. 

• Talent hotspot - London continues to house a highly skilled population, with world-leading educational institutions and diversity of employment opportunities attracting talent from across the globe. Importantly, the skills profile of London's residents continues to evolve, with a rise in the number of students studying technology-related majors, and a 15% increase in the number of workers with 'frontier' industry-related skills. As a result, London-based firms are able to access the skills required to evolve through an era of rapid technological change.
• Financing hub - London continues to be a leading conduit between private capital and firms seeking investment, backed by a private equity market that continues to grow in both size and share. In the pool of city peers assessed in the report, London comes second only to New York in terms of venture capital (VC) market maturity. Furthermore, AI and fintech have accounted for 60% of all VC deals made in London since 2019 - totalling over 7,000 - demonstrating that investors are actively backing the ‘frontier’ industries based in the Capital. 
• Entrepreneurial ecosystem – London continues to be a global leader in innovation. In the pool of city peers assessed, London comes second only to Tokyo for number of AI patents per million workers, proving it is a hotbed for new AI tools applicable for ‘frontier’ industries. Underpinning this is a stable business environment; London ranks second only to Bern, Switzerland for institutional stability and low corruption according to IESE’s Cities in Motion index, minimising financial risk and uncertainty for the firms operating within it. 

Taking decisive action to secure productivity growth

For potential to be converted into progress, firms will need to build on the platform that London offers. The report outlines key targeted actions that should be taken.

For the private sector, the report identified three priorities. First, employers must ensure workforces are equipped to adapt to a period of rapid AI adoption. This goes beyond providing technical skills; nine of the top 15 skills that employers say will be most important in 2030 are, in fact, people skills. By arming employees with the skills to work alongside technology, rather than be replaced by it, firms can convert tech efficiencies into acceleration, not reallocation.

Second, firms should use frontier clusters in London, such as Camden’s Knowledge Quarter and the City of London’s fintech hub, as a platform to share talent, data and infrastructure. Exploring new partnerships that can be developed with firms across other sectors will help accelerate innovation and route to market, with research showing that firms with mature business partnerships see revenue growth up to twice as high as those with less mature partnerships.

Third, firms should ensure they are adopting AI tools with intent. 96% of businesses plan to invest in AI in the next year but two thirds (65%) remain reliant on off-the-shelf applications. Firms that take a problem-led approach when selecting, implementing, and scaling AI tools are likely to realise the greatest productivity benefit.

The report acknowledges that a number of London’s challenges cannot be solved by the private sector alone, and effective public-private collaboration is key to success. Action that reduces high energy costs would boost long-term price competitiveness; better access to growth-stage financing would increase the retention of innovative firms; and workable housing solutions would make London a more viable long-term home for the best global talent. Further, targeting policy action to help young people get the skills ‘frontier’ industries are looking for would create pathways from compulsory education to employment, mobilising London’s digitally native young NEET (Not in Education, Employment, or Training) population whilst also helping to fill the skills gaps firms are facing.

Simon Oates, UK Economics Leader at PwC, said:

“As the UK rightly takes steps to level up its regions, it has become almost unfashionable to talk confidently about London. However, the reality is that a prosperous Capital creates significant economic spillover effects that, in turn, generate payoffs from Caithness to Cornwall. Strengthening productivity growth in London is therefore firmly in the national interest. 

“Our Grow London report highlights just how well positioned London is to convert emerging opportunities into stronger productivity gains, hosting the ingredients that matter most for innovative firms across frontier industries: talent, capital, and an entrepreneurial ecosystem. If decisive action is taken to build upon this platform, an additional £76bn of annual output could be unlocked for the UK by 2030.

“It’s clear that London has the ingredients for frontier industries to thrive. The task now is to turn this strong platform into productivity, investment, and growth. If business and policy combine behind that ambition, a new phase of economic growth can be unlocked for both the Capital and the country as a whole.”

Quentin Cole, Partner, London Market Leader at PwC UK, said: 

“London as a global city is a major shop window into the rest of the country and has the platform to drive the next wave of productivity with its strong frontier industries. With London Tech Week this week there is no better time and place to see the innovation, strength and capital within the industry, but the report shows we can go further with productivity gains to unlock even greater value.

“Firms need to invest in skills, partnerships and targeted use of AI, while policymakers focus on reducing costs, improving access to finance, and building a future-ready skilled workforce. If we get this right, London can turn its strengths into sustained growth that benefits the whole UK.”