PESTEL analysis of London (City Profile)
This is a comprehensive PESTEL analysis of London (City Profile). London is one of the most influential cities in the world. It has been a major center for commerce, culture, and learning for over 2000 years. Its founding dates back to 43 CE, when the Roman armies started their occupation of Britain under Emperor Claudius (Clout, 2022). Today, London is Britain’s largest thriving metropolis with over 9.5 million people. Its position both in the UK and Europe makes it an enticing place to live, visit, or do business in.
Political factors that affect London
London, the capital city of the UK, houses the UK Parliament. It is the country’s largest metropolis. The mayor of London is the chief executive of the Greater London Authority (GLA) who is elected for a fixed term of four years. He/she sets out plans and policies for the city covering several issues e.g. housing, climate change, tourism, economic development, and social equality.
Many Londoners are considered liberal and have left-wing political attitude. They are often very positive about immigration. However, in terms of political affiliation, it is clear that the country’s two major parties i.e. the Conservative Party, and the Labour Party have vastly dominated the political discourse as evident from the results of the mayoral elections.
London must contend with many different political factors. The Brexit vote was a hotly debated issue and had led to uncertainty in the financial markets. London largely benefitted from the EU, and therefore, departure of the UK from the EU may have significant impacts on it.
Economic factors that affect London
Economic environment is a key area of discussion in this PESTEL analysis of London (City Profile). According to ONS, cited in Silver (2021), London accounts for almost a quarter of the UK’s total economic activity. London’s economy is growing very fast and firmly, outperforming European rivals such as Paris and Frankfurt. This rapid growth is expected to continue for many years to come. Significant investments in different sectors including public infrastructures have contributed to this growth (Oxford Economics, 2022).
London is a major tourist destination, and its cultural and architectural attractions are among its leading exports. It has a huge international financial sector as well, which plays a pivotal role in the economic success of both London and the UK. Technology, manufacturing, and construction industries are booming as well.
London is famous from foreign direct investment. Many global companies and individuals invest heavily in its different sectors. Especially, investments from Qatari, Chinese, and Russian companies and individuals have drawn a lot of public attention.
Many multinational companies are headquartered in London due to the favourable tax laws, as well as the ease of travel for skilled professionals who work in different industries. London has a massive labour market with millions of people working as pay-rolled employees. Likewise, approximately, 800,000 self-employed workers are also driving the economic might of the city as well. However, it is worth mentioning that lockdowns in 2020/21 badly damaged the city’s different industries.
Social factors that affect London
London’s rapid growth in the last decade has been a result of globalization. Its total population is over 9.5 million (World Population Review, 2022). It is one of the most cosmopolitan cities in the world and is home to many ethnic groups. These people different cultures and creeds have immensely contributed to London’s economic strength.
London is one of the most vibrant cities in the world. It is a city where over 300 languages are spoken. It has three of thetop ten museums and galleries in the world, and four UNESCO world heritage sites. A huge number of festivals, cultural activities, and trade shows take place regularly creating vast opportunities for both individuals and companies. Visual arts, theatres, sports, and many more things draw the attention of the global audience.
However, there are some social challenges that London needs to tackle efficiently and urgently. The city has a very expensive housing market which is unaffordable for many people resulting in some being homeless. Violent crimes, hate crime, mental health, obesity, and economic inequality are some other pressing problems for the city.
Technological factors that affect London
London is one of the most technologically advanced cities in the world and that brings an added dimension to both its commerce and culture. For example, it is a global center for entertainment and media, including TV production, sound recording, video game creation, animation, fashion, and commercial art.
Facebook, Google, Amazon, Uber, Apple, Microsoft, and Twitter, and many other technology firms employ thousands of tech workers in London. However, many of them have reported that they find it very difficult to recruit tech workers in the city. Certainly, the city’s tech sector has lots to offer to the UK GDP, and therefore, issues such as tech talent development and superfast broadband need to be addressed urgently.
Environmental factors that affect London
London, like most of England, has a temperate climate with mild winters and cool summers. However, there are many environmental challenges such as toxic air, noise pollution, air pollution, food waste, and floods present serious risks to the wellbeing of Londoners and need to be addressed urgently.
Legal factors that affect London
Legal environment is the final area of focus in this PESTEL analysis of London (City Profile). No doubt that there are some legal factors that may affect how the city operates. London is affected by several rules and regulations (e.g. Equality Act 2010) that are applied across the UK. On the other hand, there are some rules that are very specific to the city. For instance, motorists must pay the Congestion Charge (£15) if they want to drive into central London.
London has long been one of the most influential cities in the world. It is a thriving metropolis with a population of over 9.5 million people. Its position in both England and Europe makes it an attractive place to live, visit, or do business. However, as it develops, it has to face many challenges including pollution, social deprivation, overcrowding, and many more.
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Last update: 08 March 2022
Clout, H. (2022) London, available at: https://www.britannica.com/place/London (accessed 08 March 2022)
Oxford Economics (2022) LONDON 2030: HOW WILL THE CAPITAL’S ECONOMY CHANGE? Available at: https://www.oxfordeconomics.com/recent-releases/london-2030-how-will-the-capital-s-economy-change (accessed 07 March 2022)
Silver, J. (2021) London and south east now accounts for £4 in £10 of total UK economy, available at: https://www.cityam.com/london-and-south-east-now-accounts-for-4-in-10-of-total-uk-economy/ (accessed 07 March 2022)
World Population Review (2022) London Population, available at: https://worldpopulationreview.com/world-cities/london-population (accessed 08 March 2022)
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.