London’s resilience is a lesson to policymakers everywhere

In 2012 London could claim to be the world’s pre-eminent city. The Olympics had given it a showcase. Despite the financial crisis, globalisation was still just about in vogue and cosmopolitan London was its emblem. Since then, it has been hit by a series of blows. Brexit signalled that Britain was turning inwards and made its capital a less attractive place for businesses. Covid-19 raised big questions for cities everywhere; workers in central London are in the office on average for just 2.3 days per week. Over the past decade some of the most powerful currents in Western politics—anti-globalisation, fear of immigration, the fetishisation of manufacturing—have turned against London.

London has had rough spells before: a long one after the Romans left, and another in the early 18th century when its population stagnated because of mass addiction to gin. By the end of the 1980s the city’s population had fallen from a pre-war peak of 8.6m to just 6.7m. The blows of the past decade might seem like another turning-point.

Instead London is doing pretty well, as our Briefing this week describes. Its economy has weathered Brexit far better than other parts of the country. Tourism has almost returned to pre-pandemic levels. London’s population, which dipped again during the pandemic, is projected to hit 10m by 2040. The volume of new office construction hit record levels in the third quarter of 2023. It is not, and has never been, a nice place to be poor but it remains an engine of social mobility: children receiving free school meals in the capital are much more likely to go to university than their peers elsewhere in Britain.

Residents of other world cities will argue that their home patch is better than The Economist’s. (And if you like rats, heatstroke or boredom, then New York, Dubai and Singapore really are terrific.) But even friendly rivals ought to celebrate London’s resilience. The British capital is a compelling advertisement for metropolitan strengths: services, agglomeration and openness.

London’s emphasis on services rather than manufacturing helped it to sidestep the worst fall-out from Brexit. Between 2016 and 2021 London’s exports of services grew by 47%. London’s status as a global financial centre remains intact even as its dominance within Europe has been eroded; it is a vibrant centre for tech startups. Politicians in America, Europe and Britain itself are shovelling subsidies towards manufacturing, but London is a reminder that high-value services—from law to coding, consulting to higher education—can be a better source of growth, jobs and innovation.

London is proof that agglomeration still matters. The pandemic raised questions about the power of cities when people can work remotely. But in a world of hybrid work, cities win and superstar cities win bigger. Offices are still needed as places for employees and clients to gather; entertainment options matter more in drawing people into cities if their jobs do not.

Catchment areas for cities can expand if people have to commute less often, and if the transport infrastructure allows it. The railways propelled London outwards in the 19th century, and they are doing so again. The Elizabeth line, a new railway running east to west through the capital, means that the Tube map now spans an area more than 100km wide. The truncated version of HS2, a high-speed railway that was meant to benefit the north, will bring more people within the city’s reach. London is well on its way to becoming a megacity.

It remains a magnet for newcomers of all sorts: Nigerians, South Asians and Latin Americans have taken the place of EU immigrants. Two-fifths of Londoners were born abroad. Most great Asian metropolises are far less heterogeneous: under 5% of Tokyoites are foreign-born, for example. London and New York are roughly as diverse but the British capital is not as ethnically segregated, in part because of the dispersal of social housing across every borough. Immigrants have helped raise standards in London’s schools, which have gone from the worst-performing of any English region to the best.

London does have problems. The biggest by far is housing: factor in the cost of a roof and London’s poverty rate is higher than in the rest of England. London can continue to be an engine of social mobility only if people can afford to live there: planning constraints on home-building should be eased. The ruling Tories’ draconian approach to immigration is another threat.

These are problems born principally of success, not stagnation. In Britain itself politicians should be trying to replicate the capital’s success by knitting together northern conurbations. And policymakers everywhere should reflect on London’s robustness. Big cities are motors of growth and innovation. They are where people want to live, work and play. London dazzled when everything was going its way. But the lessons it offers now are even more important. ■