Is London Recession Proof?

There has never been a clear definition of exactly where the ‘North-South divide’ is but according to figures released last month it might as well be the M25, because London’s share of the total UK economic output has reached an all time high of 21.9%. Furthermore there was an 11.5% increase in active businesses between 2007 and 2011 compared to just 1% across the rest of the UK. This is a sign of a growing economy within the capital, but a very stark difference to the rest of the country. However, it is possible that optimism across the whole of the UK could return soon. The Office for National Statistics this morning reporting that the country has narrowly avoided a dreaded triple dip recession and that the UK economy actually grew by 0.3% for the first three months of this year in spite of the appalling weather we have had. Whilst most politicians and reporters are relatively optimistic, the harsh reality of how this affects – or perhaps more correctly does not affect – the majority of UK citizens is apparent when you take a look at some of the comments posted on the BBC website. At 9.46 this morning for example Mike in Gateshead commented “Double dip. Treble dip. Have any of you people ever ventured north of the Watford Gap? Here in the north east we’re still in the first one.” The North-South divide is one thing, but it seems that London has become an independent little bubble.

Economic Microclimate

London's figurehead Boris Johnson

London certainly seems to be its own economic microclimate and many think it will continue on this path for many years to come – experts believe London will have the largest meaningful jump in GDP of any city in the world between now and 2025. It’s no wonder that many people around the world aspire to live and work in London. It is one of the only truly global cities and the diversity of its residents can only add to its attractiveness and success internationally. It also helps that we have a popular and memorable figurehead for London, in Boris Johnson. He wows the international press with the charm of a typical English eccentric and can reel off London trivia such as “London has more Michelin-starred restaurants than Paris” and that it rains more in Rome with ease. Both of these are actually true.


Worldwide Promotion

Recently Boris went on a trade mission to India to promote London and opened an office there solely to champion the city. And that’s not London’s only overseas office. We have six worldwide, including in China and the USA, there exclusively to promote tourism and business investment in London. London is the financial capital of the world according to the Global Financial Centres Index, with New York second and Hong Kong third. Despite the global financial crisis London has managed to maintain that top position and this years trading is looking positive with the FTSE closing at an all time high in March. While the EU seems to do everything it can to try and restrict the City, the government has so far largely managed to prevent these measures, with the notable exception of the bonus cap.

The Future

The Shard, tallest building in
Western Europe
Source: Telegraph

London needs to stay ahead of the game to keep its prime position. There are potential problems ahead that need to be addressed, and the cost of living is a good example. It is hard to speak to a Londoner without mention of the prohibitive house prices and rocketing rent costs. Without affordable living, London risks pricing itself out of the market for low skilled workers, a vital factor of the city’s economy. And with the population expected to grow to 9 million by 2020 it is clear we need to build more housing as well as a transport system that will be able to cope with this increase. Large projects such as Crossrail will take some of the strain but work should be done now to secure funding for Crossrail 2 as well as other transport projects. When it comes to housing, personally I am a supporter of skyscrapers - I’d rather London rose up than widened out. Buildings such as the Shard create a precedent for more tall buildings because once planning permission is given, it is much easier to build others nearby.

London’s dominance in the UK economy looks set to remain for the foreseeable future. It is the London mayor that provides the vision and leadership to move the city forward as well as promoting it to the rest of the world. If other cities in Britain want to follow in the footsteps of London perhaps they should consider mayors too. But during the mayoral referendums last year, Bristol was the only city that chose to create the position. The others may have missed out on a good opportunity to have a figurehead of their city.

Richard Sowler

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