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.
