London UK's economic trailblazer

LONDON'S resurgent economy stepped up a gear last month, with business activity in the capital expanding at its fastest pace for almost three years and outstripping the national average.

In a further boost for Londoners, the outlook for employment continued to improve as only a handful of staff were axed.

The findings come in the latest Royal Bank of Scotland London poll, based on the respected CIPS/ Reuters National Purchasing Managers' report.

The survey's headline business activity index was 59.8 in September, a big improvement on August's 57.1 and signalling the fourth consecutive month of growth.

A reading above 50 indicates expansion. The national figure was 56.7, meaning growth in London was stronger than that for Britain as a whole.

'In general, firms attributed the rapid expansion of overall business activity to a further improvement in demand, and to enhanced sales and marketing drives,' the report says. 'The pace of output growth was sharper than recorded across the UK as a whole for the third successive month.'

Incoming new business grew at the fastest rate for more than two and a half years. That was attributed to a generally improved economic climate and greater certainty among clients. Most of the strength stemmed from the services sector.

The pace of job-shedding slowed for the fourth month in a row as increased workloads made firms unwilling to axe staff. The slight fall in employment was mainly down to the non-replacement of leavers and voluntary redundancies.

RBS senior economist Stuart Porteous said:'London has now clearly established itself as the fastest-growing region in the UK.

'The further growth in output and new orders in September is more evidence that the recovery is here to stay. Employment prospects in the region are beginning to improve, which is further evidence that confidence among the business community is growing.'

Today's report is the latest in a long line suggesting the capital's economy is roaring back to life.

The Centre for Economics and Business Research recently upped its growth forecast for London this year from 1.6% to 2.3%.

In its report, RBS says all 12 UK regions enjoyed growth in September, adding to mounting evidence that the economy is recovering.

Although London and the South-East are leading the upturn, manufacturing regions such as the West Midlands are also showing a marked improvement.

The report says the findings indicate that the economic recovery is increasingly strong and broad-based.