The price of renting property and shopping in London is among the highest in the world but earnings are now lower than most other major capitals, including Paris, Berlin and Madrid, according to a study by wealth manager UBS.
London ranked eighth most expensive city in the world in 2018, with Zurich and Geneva the priciest. But when judged by gross earnings, Londoners are 24th in the world, with salaries just half of those in Geneva and a third below the levels enjoyed by New Yorkers.
Three years ago, when UBS last carried out the study, London was ranked sixth on prices and 13th on earnings.
The comparisons are based on prices and earnings converted into US dollars, and underline how much London has fallen on a global basis since sterling plummeted after the Brexit vote.
To afford an iPhone X, the average Londoner would need to work 11.3 days to earn the $1,390 required, compared to 6.7 days in New York for $1,088. UBS also found that while food prices in dollar terms have dropped significantly, avocados are peculiarly expensive, with prices in London the second highest in the world.
Salaries for many jobs have fallen in dollar terms in London since UBS last carried out a detailed examination of prices and earnings in 2015.
“If we look at salaries for a product manager, London topped the table in 2015, but salaries have since risen significantly in Madrid, Paris and Berlin. Today they outpace London, where average salaries have declined and are now the lowest of the four European cities,” the Swiss bank said.
Secretaries in London also used to earn comfortably more than their colleagues in other European capitals, but no longer.
“A secretary in London in 2015 was likely earning around $28,606 a year – a few hundred more than secretaries in Berlin and several thousand more than those in Paris and Madrid. Since then, salaries have climbed everywhere and the gap between London and other European capitals has closed,” it said.
American and Canadian consumers emerge as the world’s wealthiest in real terms, with their spending power far superior to Europeans apart from Switzerland.
Residents of Los Angeles emerge as the most well-off in the world in purchasing power terms, with the spending value of their incomes 48% higher than Londoners. LA is joined by Miami, Chicago, Toronto and New York among the top 10 cities in the world for local purchasing power. London was ranked 23rd, just ahead of Riyadh and Nicosia.
One silver lining is that rents in London have fallen. UBS said that in 2015, rents in London in dollar terms were the highest of any European capital, with an average of $2,851 per month. That made a flat in London more expensive than in Paris ($2,445), and markedly pricier than in Madrid ($1,049) or Berlin ($894).
It said that today, average London rents have declined to $2,548, falling below Paris, where they have risen to $2,854. But that will be cold comfort for most people in the city as, while rents in the capital will appear cheaper in dollar terms, in sterling terms they are little different.
The UBS study has been running since 1971 and gives a snapshot of how relative prices and earnings have changed around the world since then.
Within London, the figures show that a primary school teacher in 1976 earned around $8,079 a year, significantly more than a car mechanic ($5,807) and a bus driver ($7,485). But today the primary school teacher, on $34,756, earns less than the bus driver ($34,802) and the car mechanic, now on $36,626.
Salaries in Dublin, once the poor relation of London, have risen dramatically as Ireland’s economy has boomed. In 1976, a Dublin bus driver earned 32% less than a London bus driver in dollar terms, but today they earn around 25% more.
The gross income of a bus driver in Johannesburg was almost double that of one in Athens in 1971, but is now just half what their Greek counterpart earns, while in Zurich a bus driver currently earns $86,238, or not far off triple what a teacher picks up in London.
The world’s 10 most expensive cities, ranked where New York = 100
- Zurich – 116.8
- Geneva – 113.4
- Oslo – 107.8
- Copenhagen – 106.1
- New York – 100
- Tokyo – 99.5
- Milan – 95.4
- London – 92.9
- Chicago – 92.7
- Helsinki – 91.8
Source: UBS Global Cities Ranking 2018. Based on basket of 128 goods and services used and consumed by a three-person family. Excludes rent.
Bus driver pay around the world (per year)
Luxembourg – $99,241
Zurich – $86,238
Copenhagen – $50,073
Dublin – $43,374
New York – $43,340
London – $34,802
Shanghai – $12,072
Istanbul – $7,848
Lagos – $1,498
Cairo – $860
Source: UBS Global cities ranking 2018 – selection. Based on interviews with bus drivers, to find out how much they earn, how many days of vacation they receive and how much they need to spend on taxes and social contributions.
•This article was amended on 30 May 2018 to change the description of UBS in the first paragraph
