Gerard Lyons: London’s on top of the world — here’s how to stay there

Cash, commodities and creativity: the capital has all of these, and that’s why it is considered the best city to visit

Homage to heritage: Chinese tourists at the Tower of London, one of our top visitor attractions (Picture: Alamy)

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Gerard Lyons|Chief Economic Adviser To Boris Johnson

11 July 2014

London is the “world’s favourite place to visit”. It’s not just Boris Johnson who says so: this week the MasterCard Global Cities Index report told us that in 2014 London will welcome a staggering 18.7 million visitors, making it the world’s number one place to visit, ahead of last year’s winner, Bangkok. These numbers include businesspeople as well as tourists.

Tourists are attracted by many things such as the UK’s heritage, arts, culture, plus other elements that contribute to our London way of life, including our ability to host major events such as Monday’s Tour de France. London’s welcoming nature and its falling crime rate all contribute.

Ever since the Olympics, the capital’s global brand has gone from strength to strength. Yet nothing can be taken for granted — as soon as you reach number one, the challenge becomes tougher to remain there.

London is bound to remain a top tourist destination. A greater challenge will be to ensure it remains the number one place to work and live. Here the competition may be both domestic as well as international, as the rising cost of living may tempt younger people to look in the UK, while other cities around the world will compete to attract the top jobs.

London needs to play to its strengths, adapt and change and anticipate the changing drivers of the world economy. In my new book, The Consolations of Economics, I show how the world economy looks set to grow strongly in the coming decades and the countries or cities that succeed will have one of the three Cs: cash, commodities or creativity.

The good news is London has plenty of creativity and the ability to prosper if it positions itself correctly. Growing international trade and the emergence of many new markets provide opportunities for London-based firms to sell into. London’s universities, the NHS and our tech and science base are well placed given the scale of innovation across the globe.

More global economic growth is being driven by the world’s biggest cities. The world’s largest 600 metropolises are home to one in five of all people and yet account for more than half of global growth. This is impressive but over the next 20 years these top cities are expected to drive more than two-thirds of the increase in growth. More people will live and work in cities and spend their money there.

While tourists will always visit London, we must ensure that our jobs don’t go elsewhere. The capital has to remain open to inward investment and as receptive to global ideas as possible. I think it will — but it requires continued investment and change.

As more young people choose to live in London it is likely that the jobs and leisure activities that they want will also be here. Older people used to leave cities; now they stay, keen to remain active, close to shops and friends.

To be competitive, London is investing in its infrastructure such as housing and transport. Much is happening and lots more is planned but with its population growing by about 100,000 a year, the challenge to make the city affordable and easy to travel across is clearly there.

London also needs to keep looking after its soft infrastructure, namely the skills and education of its people. Alongside the Government’s tax policy, this is the magnet for inward investment.

It would seem that in terms of highly skilled jobs, London is doing well. A report last year by consultants Deloittes suggested that London leads with 1.5 million high-skilled, knowledge-based jobs, ahead of New York with 1.2 million, Los Angeles with 784,000 and Hong Kong with 630,000. But in an era of globalisation such jobs are mobile and can move elsewhere. Hence London needs to keep its cost of living down and its quality of life up.

It is not just about top-paid jobs. Having grown up in Kilburn, I always found the idea of a north-south divide as missing the point. London has the same challenges facing other parts of the UK. Indeed, some of the poorest boroughs in the country are in London and one in five Londoners earns less than the living wage. So London needs to ensure it is affordable for all and that small businesses, not just international firms, can compete and generate jobs here.

Low-skilled jobs remain important for an economy like London, so getting more firms to pay the London Living Wage and encouraging Westminster to keep taxes low is important.

Also crucial to London’s success are many of the “soft” things we take for granted such as the English language, rule of law, upholding of contracts and the protection of intellectual property rights. We need to avoid excessive regulation from Europe, too.

And London needs to remain open and connected. One challenge is that the UK does not always do long-term strategic thinking well. Others do. So London has to work hard to change the debate at Westminster. Limiting visas often blocks those who may benefit the London and UK economy.

A four-runway hub airport east of London, as the Mayor proposes, is the only answer to the UK’s airport needs, improving regional connectivity within the UK and London’s access to markets across the globe. At the same time, London has an important role to play working alongside other UK cities in the face of the global challenge and opportunity.

The list of cities with global aspirations is long: Singapore, Hong Kong, Shanghai, Dubai, Mumbai, New York, Paris and Berlin, plus others that will emerge in the future as centres of excellence in specific fields. Just as countries used to compete with each other, we need to recognise that cities across the world now compete directly with one another, in a way they never did before. London has to win that race.

Dr Gerard Lyons is chief economic adviser to the Mayor. His new book, The Consolations of Economics, is published by Faber & Faber.

Gerard Lyons: London’s on top of the world — here’s how to stay there

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