London takes the crown – notes from a resident
20 May 2014
London has for the first time claimed top spot as a centre for business, finance and culture in Cities of Opportunity - PwC’s sixth annual index of 30 major cities internationally. London has edged ahead of New York since last year, with Singapore coming in a strong third.
As a long term resident of the city, much of this was familiar. London’s economic and financial clout is beyond doubt, as is it cultural vibrancy. The UK always scores well in World Bank indices for ease of doing business and this is also reflected in London’s high ranking on our index, even if Singapore and Hong Kong do even better on this score.
But there were a few surprises for me in the index, one important caveat and maybe also one missing piece of the jigsaw.
Surprise 1: London ranks equal top with Seoul for technological readiness
The rise of ‘Tech City’ in East London has clearly helped here, but I would not necessarily have expected us to rank ahead of leading cities in the US or elsewhere in Asia. Hong Kong and Singapore are certainly not far behind and my impression is that currently middle-ranking Chinese cities such as Beijing and Shanghai will catch up fast over the next few years. This is not an area where London, or any other city, can rest on its laurels.
Surprise 2: London ranks second to Paris on intellectual capital and innovation
London scores well here due to a clutch of world class universities (Imperial, LSE, UCL, Kings) but it is an interesting contrast with the more general perception that the UK lags behind many other countries (notably in Asia) on skills and R&D investment. It may be that London bucks the more general national trend here due to its ability to attract world class talent to its companies and universities.
The fact that Paris is the one city ranking above London here was also a bit of a surprise, and perhaps offers hope that ‘Old Europe’ has the innovative capacity to compete both with the US and the rising Asian giants if it can put this knowledge to good commercial use.
Surprise 3: London’s transport system is not as bad as we sometimes think
As a daily commuter, moaning about London’s Victorian-era transport system comes naturally, but this survey suggests we may not be as bad off as we think. But my personal experience is still that modern metro systems in places like Hong Kong and Shanghai leave us some catching up to do in this area. We also have the highest cost of public transport of any city, so value for money is an issue.
Also, while London ranks top as a city gateway, how long this can continue while our flagship airport only has two runways is an open question. With the continuing debate around immigration, the UK's visa system could also be seen as a barrier to being truly open for business to skilled workers, researchers and students from rising giants like China and India.
A caveat: success comes at a price
One important caveat, which we also highlighted in our UK Good Growth for Cities index, is that there is a price for success in terms of rising costs. I already mentioned these for public transport, but this is perhaps most pressing for housing. An inflow of foreign money and a buoyant local economy has pushed up central London prices to stratospheric levels, rippling out to outer London boroughs and making it increasingly difficult for ordinary people (and particularly young people) to buy or even rent.
It is notable that US cities seem to manage costs better than London here. Cost is also a major issue though in rising Asian cities like Hong Kong, Beijing and Shanghai, where lack of space has also pushed property prices up to very high levels.
A missing piece of the jigsaw: rich vs poor
The index covers an impressively wide range of 59 indicators, but the one factor that I thought was missing was anything on the increasingly topical issue of income and wealth inequality. London certainly feels like a city that is increasingly polarised between a record number of billionaires and some of the poorest areas of the country. The riots of summer 2011 were a reminder of what could happen if social cohesion is lost as these inequalities continue to widen.
Of course, rising inequality is an issue in many countries and cities around the world, driven by the megatrends of globalisation, technological change and rapid urbanisation. But it is something we have included in our Good Growth index for UK cities and our ESCAPE index for countries, so it might be worth thinking about how to work it into future editions of our Cities of Opportunities index as well.