New York City and London have each been called the
greatest city in the world, but they're not easy places
to live.
New York City is home to more than 8.3 million people
and was ranked one of the most expensive cities in the
world in 2022, tied with Singapore.
Whereas London, with its nearly 8.8 million
residents, was deemed 28th most expensive.
The cost of living in New York is higher than in
London. It would cost approximately $9,500 USD A
month to maintain the same lifestyle as about $7,200
would get you in London.
I spent so much more money when I was in New York.
But New York City residents tend to earn more money than
Londoners, so businesses are able to charge more.
Without any contest.
New York is a lot more expensive than London.
The appetite for price gouging, I think, is much
stronger here. Like, there is much more of a sense of
just like what is the most I can possibly charge?
Rarely do they feel that way in London.
U.K. residents tend to pay more in taxes than people in
the U.S., but the difference is less stark in
New York City than the rest of the country.
In general, the tax burden in Europe is far higher than
it is in the States.
On the other hand, that also means that a lot of
what we would deem public services is much more
expensive in the States because you have to pay for
that on top of the taxes.
The difference between New York versus what you would
see in London isn't as large for local income
taxes, but it is significant for sales taxes
where you have relatively low sales taxes within New
York. The U.K.
Has a value added tax of 20%.
So how much does it cost to live in New York versus
London? And why are people willingly paying so much?
Hi, my name is Lucy and I'm a 25 year old New Yorker
living in London.
Lucy has been challenging herself to limit her weekly
budget for everyday expenses to $150 USD.
This is day two of trying to spend less than $150 in a
week living in London.
It was so interesting to compare how expensive New
York is with other cities across Europe.
It really makes you conscious of how much you're
spending.
Let's start with your biggest expense, no matter
where you live. Housing.
Rent prices in New York City are about 47% higher than in
London.
A one bedroom in the city center averages around
$3,800 in New York.
In London, a comparable apartment would cost nearly
$2,600.
Rent is cheaper in London.
In New York, my apartment was $1,800 a month for a not
tiny, but not gigantic studio.
It's like a walk up building. There's no laundry
in the building. We couldn't control the heat.
So like mid-tier apartment .
In London, I pay £1,300, which I believe is about
$1,600 for a room in a six bedroom house.
We have laundry.
We have a garden.
We have a gardener.
We have a housekeeper.
I do think the current house that I'm in is
expensive for London, and I would be able to find
something cheaper if I wanted. I've never had a
backyard before, and it's so nice.
And now I don't want to leave it.
Hi, I'm Lily Slater and I grew up in London.
I now live in a studio apartment in Prospect
Heights, which is, an equivalent neighborhood is
like in Islington, in London.
There, I could get a one bedroom for the cost of my
studio.
Grocery prices also are 70% higher in New York.
Except for milk and cigarettes, common food
items are between 27% and 220% more expensive in New
York.
Groceries here are so cheap.
Every time I go to the grocery store, I am shocked
at the prices. Like when I check out, I'm like, In New
York, this would be double.
There were things I bought all the time, like a pint of
yogurt was like a pound.
You got it at Tesco, like a normal grocery store in
London, and then here it just is $7 or $8, very
frequently.
New York is also more expensive when it comes to
having fun.
The culture of spending is just so major here.
Social things mean spending money.
Like if you go out for dinner and it's really
expensive or you go to a show and it's really
expensive and there are just affordable ways to
spend time with your friends and your family in
the U.K., in London at least, that just don't
really exist here because there are things like pubs
that are affordable because a lot of people in their 20s
live in nice houses with living rooms and dining
rooms and kitchens.
Tipping culture is also a big part of the U.S., with
restaurants and bars expecting 15% to 25%
gratuity on service on top of taxes and potentially a
service fee. This can significantly add to the
cost of going out.
Alcohol can be a lot cheaper here.
Like, you can get a pint of beer for like £4, but then
they still have places where it's like £19, £20
cocktails, which is the same in New York where you can
get a $25 cocktail and feel really bad about yourself
afterwards.
New York may be more expensive, but New Yorkers
tend to make more money and are taxed less than
Londoners.
The average New Yorker earns a little less than $1,400
per week, whereas London's average is a little less
than $1000 or £805.
Because of this, local purchasing power in New York
is about 19% higher than it is in London.
When I took out my most recent job and got a pretty
big pay bump, and my dad, who lives in South London,
was like astonished by how much money I was gonna be
making. And then he came to visit me like two weeks
later and was like, Oh yeah, that must not go very
far because he was, he and his girlfriend bought a
coffee and it cost $15 for just two coffees or
whatever. But we also have to factor in taxes.
The United Kingdom income tax rates are set for the
whole country. They're progressive, which means
that as you earn more money, you will pay a higher
marginal tax rate.
The U.K. has four tax brackets with the highest
rate set at a little over £125,000 or around $157,000
USD.
Compared to U.S.
income tax brackets, that's a relatively low threshold
for such a high rate.
It's more difficult to figure out exactly how much
New Yorkers pay in income tax because, unlike in the
U.K., we have state income tax, so we don't have a
clean table of tax brackets like the U.K.
New York has the highest top personal income tax rate
when you combine state and federal than anywhere else
in the country. But the state tax system layers on
top of federal tax rates.
So you can have folks who are making relatively modest
incomes or modest incomes for New York City that are
facing tax rates that are into the high 30s and low
40s.
My friends just like can't like ignore the figure of
what their salary is going to be and do the same thing.
So think if it is like marginally different, it's
either side of that number.
Think I might be like 28 and she might be 32 or
something, but it's pretty close.
We also have to factor in consumption taxes, which are
taxes on things that you buy.
Those are called sales taxes in the U.S.
and value added taxes in the U.K.
The value added tax in London is set at 20% for
most goods and services.
In New York, total sales tax is about 9%.
But there's one crucial difference.
In the U.K., taxes are built into display prices in
stores. In the U.S., you have to do that math on your
own.
It's more part of the way you budget.
It's like, it's a number that you don't even think of
as being separate to the cost of things, and here
it's two separate things, and think that makes it feel
more like a burden here, even if it is less money.
You may be wondering, if there's a 20% tax on goods
in London, why are things less expensive?
Well, there's a lot going on behind the scenes when it
comes to how businesses are paying taxes.
But that process depends on what country you're in.
Businesses also pay that tax when they're buying things
for their business.
And this can lead to additional tax burdens where
the business buys the thing and they build the thing and
then they sell the thing and there's taxes all along
the way, even at a 5% rate.
This can build up into kind of a pyramid structure where
their total tax burden across the supply chain is
relatively high.
Value added taxes are calculated differently.
The business is able to get a rebate for the tax that
they paid at an earlier stage of the process.
When they sell that thing along to the next either
business for final manufacturing or to the
consumer.
So why are these cities so expensive?
The short answer is because more than 8 million people
want to live there.
New York was the top city reader's dream to move to,
followed by London, according to a recent Time
Out magazine survey.
London and New York are both financial and political
hubs with a broad set of industries and job
opportunities.
I work at social justice.
My sector is just less interesting, in my opinion,
in the U.K. than it is here.
Both cities also have vibrant nightlife and
cultural events. New York City's nightlife is an over
$35 billion industry that creates nearly 300,000 jobs
and generates roughly $700 million in tax revenue for
the city.
But those stats are pre-pandemic. New York's
restaurant, retail and recreation sectors lost 4%
of businesses as a result of Covid-19, but there has
been a rebound. As of April 2023, those jobs are down
around 2% from their peak in February 2020.
London makes up 25% of the U.K.
leisure economy, which means the city's sector is
responsible for generating more than £42 billion or
nearly $53 billion USD in 2019.
Between March 2020 and June 2021, it's estimated that
the U.K. nighttime cultural economy lost around £36
billion in business, or roughly $46 billion USD.
In my experience traveling around Europe last year,
London was the place that I found to be the closest to
New York in terms of there's always something
going on, there's always something to do.
You're never going to be sitting at home like, Ugh,
what am I going to do this weekend?
Both cities also do not require a car to get by,
which can save on transportation costs.
Walkable cities and good cities are more expensive
and they become more expensive because they're
valued. If you make places better or you make better
places, people vote with their feet, they become more
expensive.
London and New York both have world renowned public
transportation systems, but New York's fares are a fixed
$2.75 per ride, whereas in London, the further you
travel, the more you pay.
I think I prefer the subways in New York because they are
cheaper and they're 24/7.
There are more subway stops in New York City than there
are in all the other cities in the U.S.
put together.
The tube is nicer than the subways because it doesn't
run 24/7 and they have attendants always posted.
The London Tube is a lot, a lot cleaner, like radically
cleaner. Like I never saw a rat.
Ultimately, New York City seems to be a little worse
for your wallet right now.
So if city life is for you and you're willing to pay
the price, it may just come down to personal preference.
My impression is that the level of zeal is higher
about New York. I think something about New York,
whereas like people are so obsessed with living here
that they will put up with how gross it is and how hard
it is and how expensive it is anyway.
And don't feel like that's true in London.