London economy subsidises rest of UK, ONS figures show

Breakdown of public finances shows how taxes and public spending are used to narrow north-south divide

London's thriving economy generates a 26.5bn surplus that is recycled by the government to provide financial help to Britain's less well-off regions, according to an official breakdown of the public finances.

The first attempt by the Office for National Statistics to break down the UK's budget deficit by region has demonstrated the importance of the capital and highlighted how taxes and public spending are used to narrow the north-south divide.

Related: If London subsidises the rest of the UK, where does that leave Scotland? | Nils Pratley