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Will London Be the Fastest Growing City by 2025 and Is Income Protection Insurance Still Relevant?

Will London be the fastest growing city by 2025 and if yes, is it going to impact the various products and services designed to serve the market such as income protection insurance? The The debate on importance and relevance of the workers in London having an income protection and payment protection insurance carries on.

While media is filled with a constant stream of news about businesses closing down in London and various companies based in London steaming ahead with redundancies, one of the latest reports from the Citi Group predicts some positive news for London. It is important to understand the assumptions that this report is based on and not get carried away. If one does not pay attention to the small print, one can easily construe this report to be indicating that the London will be soon out of its mess and the days of income protection and payment protection insurance for London are over!

According to a study of the Citi Group, London is expected to have the largest meaningful jump in terms of GDP between now and 2025. This means London as a city will be well ahead of it's other competitors. Strong performance in financial services within the square mile and tourism will be the main factors which will help London overtake Chicago to take this coveted position. This is expected to happen by the middle of next decade. This will make London the fourth largest economy in terms of cities. Tokyo, New York and Los Angeles will continue to dominate the first three pole positions.

Though there are various views on London's growth, analysts at Citi believe that the financial district will perform helping London to get that coveted position. The other factor that will help London is the prediction that the population will not grow or rather be almost stagnant even when the economy grows. This helps in terms of it's per-capita growth. The per person GDP for London will increase from $65,698 in 2008 to $95,266 by 2025, a rise of over 45%. The total GDP for London is forecasted to be $821 Billion, which is less than half of that forecasted for Tokyo whose GDP is expected to grow from $1.48 Billion in 2008 to $1.98 Billion in 2025.

While the numbers are impressive and real positive news for London and the financial services sector in the UK, it is based on rather very optimistic assumptions, London's delivery of higher numbers with no population increases over the next decade being a significant one. Like all statistical figures, the reality of such projections used depends on assumptions taken. It is rather absurd to consider that the population of London will remain the same over the next 15 years. All government figures show that the immigration has not receded, changing business models of banks and other financial institutions is bound to impact on the redundancies. The financial sector employs less than 50% of people in London and very soon will be overtaken by the Telecom, Media and Advertisement industry. Hence the reality is that regardless of whether there is immigration or not, due to the fundamental changes in the business model of the UK finance market, there will be a lot of redundancies. It is widely reported that there is an over capacity in terms of IT and project management staff and as soon as the backend systems of the large banks that merged a few years ago are integrated, there is bound to be a new wave of redundancies.

Hence it is important that people do not get mis-guided by such headline grabbing analysis and not protect themselves against their incomes or payments.

It boils down to basics, if anyone wants to be economically active, they should have a steady income stream and a profession that will always in demand or alternatively be realistic and invest in a reliable accident, sickness & unemployment policy. Research such as Citi Group's discussed in this article based on flimsy assumptions should not mislead people from the reality.

Kesh Thukaram

For more information on: Income Protection Insurance

The author is a well established professional in the UK protection and employment insurance market. Respected for his views and analysis, he is regularly quoted by various leading members of the main stream press and academic journals.