London economy starts to lag in Britain's recovery battle

London businesses lagged behind much of the other English regions last month as a survey today showed growth in the capital at its slowest for seven months.

The 1,200 private-sector employers in the survey, conducted by research firm Markit, reported that virtually every other region of England apart from the South-West and the East grew faster than the capital in April.

The Purchasing Managers Index showed output in London at 57.2, down from 61.8 at March, but still above the 50 level which shows a net number of businesses experiencing growth.

London had previously been growing fastest out of recession.

Tim Moore, economist at Markit, said the disruption from the volcanic ash may have been partly to blame for hitting London and the services sector in particular.

New orders are "generally stronger" in manufacturing than services nationwide, he said.

There was also bleak news about London jobs, according to PMI's employment index, which stood at 50.8 in April, almost exactly the same as in March.

Moore described it as a "meagre increase and slightly behind the UK average".

Every other UK region increased employment at a faster rate than London, with Yorkshire and the south-east of England outside the capital back in positive territory in April after almost two years of continuous decline.

Moore said: "The encouraging aspect is all the UK regions are seeing jobs growth."

Markit also reported that inflation is rising because of higher fuel and raw materials costs.

But London saw the slowest rise in inflation.