With 1.2 per cent, London had the largest positive quarter-on-quarter growth in last year's April to June period. Reuters
With 1.2 per cent, London had the largest positive quarter-on-quarter growth in last year's April to June period. Reuters
With 1.2 per cent, London had the largest positive quarter-on-quarter growth in last year's April to June period. Reuters
With 1.2 per cent, London had the largest positive quarter-on-quarter growth in last year's April to June period. Reuters

UK recovery data shows London pulling ahead of other English regions


Matthew Davies
  • English
  • Arabic

The latest regional figures for the UK economy show that London grew at a faster pace than the other eight English regions in figures that highlighted the government's challenges in shifting growth outside the capital.

The Office for National Statistics (ONS) said London had the largest positive quarter-on-quarter growth in last year's April to June period at 1.2 per cent, while the largest negative growth was in the North-east, at 1.6 per cent.

Overall UK GDP growth in Q2 of 2022 was 0.1 per cent, part of an up-and-down year in which Britain posted a 4 per cent increase, the fastest in the G7 grouping.

"Of the nine English regions, only London, the east of England and Yorkshire and the Humber are estimated to have shown positive growth in quarter two, 2022, with growth flat in the North-west," the ONS said.

"The North-east, South-east, East Midlands, South-east and West Midlands all showed negative growth, with the largest negative growth at 1.6 per cent in the North-east."

FILE PHOTO: A general view is seen of the London skyline from Canary Wharf in London, Britain, October 19, 2016. REUTERS / Hannah McKay / File Photo
FILE PHOTO: A general view is seen of the London skyline from Canary Wharf in London, Britain, October 19, 2016. REUTERS / Hannah McKay / File Photo

Compared with the same quarter in 2021, London's economy grew by 9.5 per cent, followed by the North-west with growth of 3.6 per cent.

The ONS pointed out that "regional data can be volatile and quarterly movements should be considered alongside the long-term trend".

The stronger performance by London brings into question the effectiveness of the British government's levelling-up policy, which aims to create opportunities for everyone across the UK, backed up by a £4.8 billion ($5.81 billion) fund.

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Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

Updated: February 10, 2023, 11:35 AM