LONDON will remain one of the wealthiest cities in the world over the next 25 years while Paris will be replaced by Shanghai, according to a new report by economic think tank Oxford Economics.
In its latest ‘Global Cities’ report, the firm predicts that Asian cities will account for almost half of all economic activity in global cities by 2035, with the total GDP of the top 150 Chinese cities already exceeding that of the largest European centres combined.
Despite the rise of Asia, Oxford Economics says that today’s global superpowers will likely hold onto their top spots, except France’s capital.
The report says by 2035 the wealthiest cities in the world will be New York, Tokyo, London and Los Angeles - with only Paris losing its places to an Asian upstart.
It comes amid increased economic uncertainty in the UK due to the country's impending exit from the European Union.
Since the UK's vote to leave the EU in June 2016, economic growth has slowed significantly. In 2015 the UK registered 2.2 per cent GDP growth and, according to the independent Office for Budget Responsibility report in March 2016, was on target for two per cent in the full year 2016.
However the vote to leave sent the pound tumbling and inflation soaring to five year highs and GDP slipped to 1.8 per cent. This year UK GDP is on target to fall to 1.5 per cent – the lowest rate of growth among any of the most developed G7 nations.
Both the OBR and global economic body the OECD expect UK economic growth to continue to slow year-on-year, falling to 1.1 per cent by 2019. This will be the second lowest rate of growth in the G7, just ahead of Japan (1 per cent). In comparison the US will grow by 2.2 per cent while Germany, France and Italy will grow by 1.9 per cent, 1.7 per cent and 1.3 per cent respectively.
This is down from forecasts for UK GDP growth of over 2 per cent a year between 2016 and 2020, made in March 2016, three months before the Brexit vote.
However, London is buoyed by its financial industry - the world's most powerful according to the latest Global Finacial Centres Index - as well as it's services sector. Together finance and services account for the greatest shares of UK GDP.
The total value of London's economy is currently £619billion – accounting for more than a third of the UK's total GDP of £1.9trillion.
Mark Britton, Associate Director of Oxford Economics, said: “The economic landscape is evolving, with urban centres at the forefront of change.
“Many of today’s emerging market cities, particularly in Asia, will continue to progress along the development path and the balance of urban economic power will shift further east as a result.”
The firm says that the wealthiest 780 global cities currently produce almost 60 per cent of all world economic activity – $45trillion – and house 35 per cent of the global population (2.6 billion people).
However by 2035, Oxford Economics predicts these cities will be home to almost half a billion extra people, while the value of economic activity will rise by an extra $32trillion, with Asian cities at the forefront of this shift.
Mr Britton added: “The aggregate GDP of Asian cities will overtake the sum of those located in Europe and North America in just over a decade. To put this into context, just ten years ago the aggregate GDP of European and North American cities was twice the size of Asian cities.”