Head of Law Firms Advisory Group
Oct 04, 2016
By David Snell
For the second time running, London has been named as the world’s leading city of opportunity, in our Cities of Opportunity index. London’s top ranking was thanks to its strong performance across 10 indicators, embracing key facets of urban success: from technology readiness and sustainability to economic clout and ease of doing business.
But at an event held at City Hall to launch the report and mark London’s achievement, the audience was asked how confident they were that London would retain its crown in two years’ time. Roughly half of those present agreed it would. So what are the challenges that London needs to confront successfully to remain in the number one slot?
Clearly, the uncertainty generated by the EU referendum will have an impact on the city’s future. But, at this early stage, and with so much to be negotiated, it really is too early to tell what this leap into the unknown may bring. The process of Brexit will take many months and even – some say – years to complete. While, clearly, services (and financial services in particular) are hugely important to London’s economy, the impact of Brexit would not be felt equally across all sectors of financial services. In short, Brexit will be a factor in determining London’s future performance. But the nature and extent of that influence remains impossible to gauge.
In the meantime, the categories in which London outperformed all others – economic clout and intellectual capital and innovation, for example, – are evidence of resources that have taken many years to develop and, likewise, would take many years to decline.
At the heart of London’s success is its people. London’s status as a dynamic business environment, open to all, is exemplified by the story of the current Deputy Mayor for Business, Rajesh Agarwal. He arrived in London from small town in India with £200 in his pocket and 15 years later is a leading player in FinTech, with a business turning over more than £1 billion per annum. And London remaining open for business will continue to be a critical driver of its success.
In the burgeoning tech sector, for example, London is at the centre of a UK digital economy that is one of the fastest growing of the G8 and G20, expanding 50% faster than the general economy and adding nearly three times as many jobs. But London’s ability to attract talent to the digital – and other sectors – relies on it not only on being a city that’s open for business, but a liveable and attractive place where people wish to base their lives and build their careers.
Here, perhaps, London is in some danger of becoming, at least somewhat, victim of its own success. Ranked as one of the costliest cities in the world, London also scores relatively poorly in transport and housing. Those two areas will need to be clear priorities for improvement as London develops if it is to successfully accommodate a population set to grow by more than 100,00 every year. Housing costs in the capital are high and rising. The building of new homes, 25,000 per year, is half where it needs to be in order to meet demand. And it’s even questionable whether the right types of homes are being built in the right places. London’s vibrancy, cultural leadership and buzz is substantially thanks to its attraction to younger people. Their ability to live in the city hinges on ensuring its affordability.
London also has some of the least affordable public transport in the world. Its status as the number one gateway city to the rest of the UK, Europe and the world could be threatened without clear efforts to make it easier to get there in the first place, and then to get around quickly and efficiently. The night tube (launched in August 2016), is one positive step forwards. Others need to follow.
By scoring so highly across diverse categories of analysis, London clearly merits its leading position in 2016. There’s every reason to believe that it could retain the top slot in two years’ time. But, equally, there’s little room for complacency.
PwC in London
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