London leaps to No 2 on most costly cities list

The surge in the value of the pound has catapulted London close to the top of a league table of the world's priciest cities, figures show today.

The surge in the value of the pound has catapulted London close to the top of a league table of the world's priciest cities, figures show today.

Britain's capital leapt from seventh to second place, overtaking Moscow, Osaka, Geneva, Hong Kong and Beijing - although it was still far short of Tokyo. London is now 19 per cent more expensive than New York, a massive increase from last year when the two cities had roughly the same cost of living.

The survey, produced by Mercer Human Resource Consulting looks at the cost of living for expatriate workers rather than the local residents.

The dollar has fallen some 20 per cent against the pound and the euro in the past year, which has made it more expensive for American workers to live in London and most other European cities. Marie-Laurence Sepede, at Mercer, said: "There have been some dramatic movements in the rankings this year, which are largely due to currency fluctuations, particularly of the dollar and the euro."

The survey covers 144 cities and measures the comparative cost of more than 200 items in each location, including housing, food, as well as transport and entertainment.

The data is used to help multinationals determine compensation allowances for their expatriate workers. "London prices have increased more than in other UK cities. The scores are based on the cost of living for expatriates, who are more likely to stay in central London, where accommodation is most expensive," Ms Sepede said.