Is London Finished? | IEA Podcast

In this Institute of Economic Affairs podcast, Editorial Director Kristian Niemietz is joined by Senior Policy Fellow Lord Frost and Managing Editor Daniel Freeman to discuss three stories dominating British economic debate. The conversation covers a Financial Times investigation into London’s slowing growth and falling productivity, the Government’s cost of living announcements including tariff cuts and VAT reductions, and Wes Streeting’s proposal to align capital gains tax with income tax rates — a policy he has chosen to brand a “wealth tax.”On London, the panel picks apart the drivers behind the city’s decline: housing supply restrictions, a 71% marginal tax rate hitting high earners with student loans, the exodus of non-doms, and the post-pandemic shift away from office working. Daniel highlights that American tech firms now describe London’s talent pool as cheap relative to San Francisco, a back-handed compliment that has become the city’s chief selling point. Lord Frost raises the possibility that productive people are leaving while less productive arrivals replace them, and argues for decentralisation over national top-down fixes, pointing to Switzerland as a model for local decision-making on planning and regulation.On the cost of living package, the panel credits the tariff reductions as the one straightforwardly positive measure while dismissing the VAT cuts on children’s cinema tickets and meals as a two-month gimmick that evidence suggests will not be passed on to consumers. The capital gains tax proposals are judged far less damaging than a genuine wealth tax, but the panel warns that raising rates to 45p would deter risk-taking investment, encourage evasion, and pile further complexity onto an already overburdened system — with no offsetting cuts, such as to stamp duty, to justify the trade-off.The Institute of Economic Affairs is a registered educational charity. It does not endorse or give support for any political party in the UK or elsewhere. Our mission is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The views represented here are those of the speakers alone, not those of the Institute, its Managing Trustees, Academic Advisory Council members or senior staff. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit economicaffairs.co.uk/subscribe