lumnists wrote of the danger of absolute decline, not just relative decline. The success story has, I think, three main elements.
One is the importance of the international financial services industry. London’s dominance of the commercial banking side of that goes back to the 1960s and pre-dates the recent boom, but the Big Bang reforms of the City in 1986 enabled it to dominate investment banking and securities business in this time zone. Finance is a huge money machine, pulling in its wake other services industries ranging from expensive lawyers to expensive restaurants.
But it is not just finance. After all, the region’s economy has weathered the worst downturn in the markets for a generation. The second general reason for success is the march of globalisation. As economic relationships become ever more international, a big advantage accrues to existing international centres. A Chinese manufacturer needs a European base. Where does it go? It goes to the place where the Chinese banks have offices. It could perhaps choose Paris or Frankfurt but London is a more natural choice. So a “winner-take-all” situation develops, where leading centres in each time zone go on growing because they are the leading centres. A global superleague of cities is emerging and London happens to in pole position.
That leads to the third force driving the economy of the South-east: the social/cultural/intellectual mix. That is, an amalgam of the world language, an open culture, two of the world’s top 10 universities and a vibrant cultural and intellectual life. Example: Britain now publishes more book titles than any other country. Further example: there are more Chinese students in the UK than in any other country, again more than the US. Of course, this is a UK phenomenon but it is one that is skewed disproportionately to the South-east.
Update: here’s that Henry James quote – “It is difficult to speak adequately or justly of London. It is not a pleasant place; it is not agreeable, or cheerful, or easy, or exempt from reproach. It is only magnificent. You can draw up a tremendous list of reasons why it should be insupportable. The fogs, the smoke, the dirt, the darkness, the wet, the distances, the ugliness, the brutal size of the place, the horrible numerosity of society, the manner in which this senseless bigness is fatal to amenity, to convenience, to conversation, to good manners…all this and much more you may expatiate upon… But these are occasional moods, and for one who takes it as I take it, London is on the whole the most possible form of life. I take it as an artist and as a bachelor; as one who has the passion of observation and whose business is the study of human life. It is the biggest aggregation of human life – the most complete compendium of the world. The human race is better represented here than anywhere else, and if you learn to know your London you learn a great many things.”
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