Not to be a traitor or anything, but I agree with James Harding — London feels like the capital of the world.
London Times, March 13, 2007
It’s cool, classy, cosmopolitan — and it should secede from the UK. Business Editor James Harding on why London is the new capital of the world. Do you think he is right?
A couple of years ago, a friend of mine bought a one bedroom flat in Chalcot Square in Primrose Hill, London NW1. He paid £480,000 — just less than one million dollars. As I was living in the States at the time and flabbergasted by the price, he explained: “Chalcot Square is the best place in Primrose Hill, which is the nicest part of London, which is the coolest city on earth.” Location, location, location. “This is the best property on the planet.”
In fact, he was a few miles off. The most prized piece of real estate on God’s green earth has a view of the Serpentine rather than of Joan Bakewell’s living room. The Candy brothers, two upmarket property developers, have started selling flats at Number One Hyde Park for £4,200 a square foot. That means £84 million — $164 million — for a nice, roomy apartment.
Why? Because London is, indeed, the coolest city on earth. The capital of the world. New York, like Paris, has become a mini-break destination, a playground for grown-ups who enjoy the same standard tourist menu: a walk around Central Park; a shopping trip in SoHo; an entertaining, if unsurprising, show on Broadway; and a very large steak.
The world loves a long weekend in New York but, these days, prefers to make its home in London. New York has the nostalgia, London the future. New York defines the metropolitan, London the cosmopolitan.
And the reason for this is that foreigners in New York are, always, just that. The city treats even its long-term residents from abroad as visitors, welcomed on to the cocktail circuit, perhaps even to a share of a house in the Hamptons, but never to the power-broking tables at the Four Seasons. “New York is always American,” says Bill Roedy, the American who has spent the past 15 years in the UK running MTV world-wide. “Like Paris is French, Moscow is Russian, New York is American.”
London, on the other hand, is passport-blind. It does not have the luxury of being the de facto capital of a continental economy. So, it is international: it treats its visitors as citizens, as players.
Consider Chelsea Football Club, owned by a Russian, managed by a Portuguese and made great by a striker from the Ivory Coast. The Yankees may sign up a third baseman from the Dominican Republic or a pitcher from Japan, but the management is born in Brooklyn.
The men who run two of Britain’s largest mobile phone operators — Vodafone and Orange — are US-educated Indians. The world’s biggest mining companies, run by an American woman and two Australian men, have their headquarters in London.
In January, Nicolas Sarkozy, the French presidential candidate, came to London to chase the votes of young advertising executives and derivatives traders who had quit Paris. Last week, the head of the Democratic National Committee’s fundraising efforts came to the British capital, too, eager to tap up American expats willing to contribute to the 2008 campaign.
The mandarins of New York are currently gripped by a bout of Woody Allen-style neurosis, fretting that the city’s stature as the capital of world capitalism is being sapped by London. Last year, Mayor Mike Bloomberg and the New York senator Chuck Schumer commissioned McKinsey, the management consultants, to examine why international financial business was drifting away from Manhattan. And it suggests that their paranoia is justified.
In business terms, London’s claim to be the world’s favourite marketplace is not just a boast, it’s a statistic: the report found that in the past five years international companies have not been choosing to list on the New York stock exchanges but to float their businesses in London. In 2001 the US accounted for 57 per cent of all stock market flotations over $1 billion — otherwise known as initial public offerings (IPOs). By 2006 this had fallen to 16 per cent. In the same period, Europe’s share of the world’s big IPOs had risen from 33 per cent to 63 per cent.
Small companies as well as big ones have been choosing London. The Alternative Investment Market, which is where start-ups tend to go to sell their shares in the UK, listed 870 new companies in the five years since 2001, while Nasdaq, the market for new ventures in the US, listed 526.
Just to be clear, IPOs account for only a fraction of the investment banking business. New York still has much more money flowing through it than London. The financial stock of America’s business capital, which means the amount of money that flows through it in shares, debt and bank deposits, was $51 trillion in 2005. In Europe as a whole it was $38 trillion.
But London has the momentum. “By any of a number of measures, New York still dominates,” says Jim Burton, who used to be in charge of one of America’s largest pension funds and moved to London in 2002 to run the World Gold Council. “But from the perspective of where financial business growth seems to be heading, London does have a ‘buzz’ . . . the Russian, Chinese and Indian business moguls are not flocking to New York. [London] seems like the more vibrant place to be.”
London already leads New York in some new and growing areas of business, such as certain kinds of derivatives. The big boom industry in US financial services over the past decade has been securitisation, which involves the pooling of different kinds of debt to be sold on to other investors. It is reaching saturation point in New York but just taking off in London.
The significance of the surge in new foreign listings in London is twofold. One, the growth in financial business these days is not home-grown but cross-border. Two, when a company comes to market it is not the end of a cycle of business, it is the beginning: new share issues, share buybacks, debt finance and mergers and acquisitions can all flow from that first IPO.
London’s financial workforce has been growing while New York’s has been shrinking — the City added 13,000 jobs between 2002 and 2005, expanding by 4.3 per cent to bring London’s total financial labour market to 318,000, while New York’s slipped back 0.7 per cent to 328,000. If the trend continues, at the end of next year there will be more people working in finance in London than in New York.
Wall Street has blamed the resurgence of London on regulation, immigration laws and the tax regime for foreign residents. There is some truth to this. After a spate of high-profile corporate collapses, Congress passed a set of new corporate governance rules known as Sarbanes-Oxley that made the whole business of operating a company in the US a lot more tiresome. Foreign companies used to consider a New York listing a badge of honour. In the past three years, many have come to see it as an unnecessary bother. They have come to London instead. (The UK has also done a good job of making the Financial Services Authority a selling point of doing business in London: while New York is governed by a rules-based regulatory regime in a litigious country that is susceptible to frivolous lawsuits, London’s regulators operate a principles-based system that has an altogether lighter touch.)
In the wake of the September 11terrorist attacks, Washington also tightened its borders. The visa restrictions have stopped many foreign scientists, mathematicians and economists from travelling to the US. The UK’s relatively open borders have become a competitive advantage. The tax regime in the UK has also played a part, but a less important one than many people think. The lenient treatment of nondomiciled residents — typically, very wealthy people who buy homes in the Royal Borough of Kensington and Chelsea but claim that their real “home” is elsewhere — has added to the lure of London. But, according to the private bankers at HSBC in St James’s, a Russian oligarch gets as good, if not better, tax terms in Moscow as he does in London.
But more than these technicalities, what matters is geography: London is the centre of the world.
From London it is possible to work a normal day and talk to Tokyo in the morning and Los Angeles in the afternoon. A businessman can get on a plane from Moscow and be in London in five hours, from Bom-bay in seven, even from Beijing in nine. This is one of the reasons why, over the past 25 years, London has turned itself into an international marketplace while New York has remained essentially a domestic financial capital.
The other factor is history. Since the late 1970s London, once the capital of a trading empire, has transformed itself into the hub of the foreign exchange markets. It became the place for European companies to borrow money, the home of the Eurobond. And in the past decade it has extended itself beyond the Continent to companies from India, Russia and China.
London’s restoration is fragile and Washington’s missteps compared with Westminster’s adroit handling of regulation and immigration have made a difference. But there is, if you like, some manifest destiny to London’s resurgence in the age of globalisation.
Deep inside the Bank of England there is a room where the directors meet around a huge, oval mahogany table. The Courtroom is, frankly, a vulgar neoclassical eyesore — but despite the pretentious opulence and faux history of the place, one thing is authentic: the weathervane.
High on the western wall of the room, this clock-face tells which way the wind is blowing. Historically, an east wind would bring the merchant ships up the Thames and, with them, a surge in business. A west wind would prompt the merchants to set sail and the bankers to rein in credit.
The point is that London has long been sensitive to the trade winds. More than that, it has been adept at exploiting changes in the tide and the climate for its own commercial gain. And in recent years it has swollen thanks to this openness to foreign merchants, who have sailed in because they are fed up with the pernickety, litigious culture in the US, or because the City is a short hop from their homes in Moscow and Bombay, or simply because they like the safety on the streets, the serenity in the parks, the quality of schools for their children and the choice of restaurants.
British cuisine, once a contradiction in terms, has become such a hot ticket that you need to book nearly a month in advance to eat a plate of offal at St John on the weekend.
London has qualities: geography, history, culture and, more than that, a grudging embrace of all comers. Within a short walk from Trellik Tower in West London you can find a coffee, a cheese sandwich and a custard pie from Lisbon that make you feel as though you are in a provincial Portuguese café; you can eat a plate of steamed dumplings from the Royal China that would satisfy a discerning Shanghainese; a steaming, home-cooked nabemono at Inaho that could come from the Ginza; not to mention a great Indian at Malabar, a fine Lebanese at Fairuz and all that groovy Asian fusion stuff at E&O in Notting Hill.
A weekend in London is like a world’s greatest hits of city living: an English breakfast at Tom’s on Westbourne Grove, a morning spent browsing vintage Americana on Portobello Road, an afternoon watching the best French footballers at Arsenal, Chekhov at the Royal Court or Puccini at the English National Opera, Irish oysters at Sheekey’s for dinner, then out clubbing with the Russians at Annabel’s or the royals at Boujis (I’m making this up now). The next morning, a Spanish string quartet at the Wigmore Hall, a proper Sunday lunch, then a sleepy stroll past the Renoirs at the National Gallery.
No question, all this takes money. A lot of it. Much more than most Londoners have. But the capital’s claim to global leadership is not, sadly, because it is an example of equality. In terms of equal opportunities and the income gap, London has nothing to crow about. It has an alarmingly high level of unemployment — 8 per cent — and the wealth gap is wide and widening.
It’s hard to say which personality, New Yorker or Londoner, is preferable — the ballsy versus the stoic, the gruff versus the curmudgeonly, the sharp-tongued versus the quick-witted. But the real difference between the two is this: New Yorkers come from the five boroughs; Londoners from the five continents. They are Poles, Pakistanis, Brazilians, Americans, Nigerians and more. There are, it is said, 300 languages spoken in London.
London is absurdly expensive. New Yorkers point out that the cost of living in their city is nearly half what it is here. Yet Charles Alexander, who is in charge of the UK operations of General Electric, America’s biggest company, says of his American colleagues in London: “They don’t want to leave.” They like the life, the schools, the style of the city.
None of this means that London’s future preeminence is predestined. Last month London First, which lobbies government on behalf of the city, convened a meeting of top bankers, lawyers and policymakers to consider how to respond to New York’s concerns about its competitiveness — for the Bloomberg/Schumer report was not so much an exercise in self-doubt as a political manoeuvre to ensure the repeal of much of the Sarbanes-Oxley legislation and a loosening of the visa restrictions. The Big Apple is going to bite back.
Bob Wigley, who runs Merrill Lynch in London, was at the meeting. His chief concern, he says, is complacency. London needs to worry about its transport infrastructure (in particular the long-stalled construction of Crossrail); it needs to be vigilant about its tax regime and defend its system of regulation. But, more than that, Wigley gives warning that “London needs to look east, towards the competition coming from Dubai, Singapore, Hong Kong”.
Many see the real test of London’s future in its ability to cement commercial relationships with countries to the east of Europe — in particular, to make it the destination of choice for companies from India and Russia. But if the City can replicate what it has done for Europe in the subcontinent and the former Soviet Union, then its place as the world’s capital of free capital will be assured for a long time to come.
In September 2002, Paul Auster wrote in The New York Times about his city’s relationship with the rest of the country: “Alone among American cities, New York is more than just a place or an agglomeration of people. It is also an idea.” New York is the de facto capital of America and still a beacon to people around the world. But London has become an idea, too, and not as a refuge for huddled masses but as the most desirable address for global elites. For them, the argument between New York and London is done. They are just left quibbling over the preferred postcode: NW1 or SW1, Regent’s Park or Hyde Park.
‘NY is cheaper and more convenient’
The Londoner in New York Vicky Ward
Recently I had dinner with three British girlfriends at a bistro in the West Village in Manhattan. We were Amanda Foreman, the historian; Abigail Asher, a film art consultant; and Joanna White, a TV documentary-maker.
We are all married working mothers and have lived in New York for years now — Abigail for 20, myself for ten, Amanda probably for eight. Joanna has lived here on and off since she was 15. The inevitable question cropped up: would any of us return to England?
The consensus was: “Don’t be absurd.” New York is such a convenient city — everything is a five-minute walk or a 15-minute taxi ride away. And far cheaper than London. Ready-cooked meals arrive in five minutes; dry-cleaners collect and deliver your clothes the same day. Hairdressers come to your house. Computer technicians swing by to fix your e-mail. The pharmacies deliver cough drops for my children; and my new best friend Charles, the chief sales assistant at Ralph Lauren, sometimes drops off sale-reduced sweaters for me to try on at home if he thinks that I’m too busy to visit the store, which is all of two blocks away.
Don’t get me wrong. We all miss various aspects of England. I get a lump in my throat when I see photographs of friends’ children in wellies, playing in soggy fields.
Yet the irony is that London today seems vibrant and cosmopolitan thanks in large part to US influences, from Nobu to Starbucks.
London Fashion Week is slowly getting more ink, but the major British designers Luella Bartley, Matthew Williamson and Alice Temperley still have no choice but to show here. Wall Street money may be relocating to London; fashion and entertainment dollars are not. And even Wall Street dollars aren’t rushing that fast. London may have lots of investment banks and hedge funds but they are all branch offices. New York is HQ.
I have a feeling that Mayor Bloomberg will soon be retracting his comments about why London could replace New York as the centre of the world and here is why.
What many Londoners might mistake for a failing in the Big Apple is one of New York’s greatest strengths: we have Haitian and Bangladeshi taxi drivers; yours are all English. London cannot shake its British habits.
New York is a genuine melting-pot, while London is several cities coexisting uncomfortably , like a bag of stoats. English London has very little to do with Russian London or American London or Arab London; stately-home England has very little to do with aspirational England. New York, by contrast, has such a powerful personality that it subsumes your other attachments and makes you something more: a New Yorker.
For all the hand-wringing in Davos and elsewhere about the evils of “income disparity”, at least in New York our billionaires pay taxes. A Russian resident not “domiciled” in London need give nothing back to the city.
Our mayor is a brilliant businessman and philanthropist; yours is not. And in New York, a true meritocracy, our billionaires underwrite the building of dozens of schools and libraries each year through charities such as Robin Hood, where wealthy board members pay all the administrative costs so that every penny raised goes to eradicating poverty in the city. Come, tired and poor and yearning work; succeed; give back.
The other evening my husband and I attended a gala dinner to raise funds for the British Memorial Garden, a monument to honour the 67 British victims of the 9/11 terror attacks and to celebrate the friendship between the US and Britain. New York City’s Parks Commissioner, Adrian Benepe, said that New York had much to thank the British for, chiefly the fact that without them “we’d all be speaking Dutch”. Now, perhaps, London could learn a few more words from us.
Vicky Ward is a contributing editor to Vanity Fair
‘London has endless possibility’
The New Yorker in London Erica Wagner
I had a small dinner party on Saturday, so I headed off to Borough Market to shop. A bus along the sunny Thames to London Bridge and then in the thick of it, stalls selling everything delicious that you could imagine eating and more.
I bought gravadlax, Old Spot bacon and unpasteurised cheese; I bought steamed puddings and custard and I had coffee, standing on the cobbles, from the Monmouth Coffee Company. I was in heaven.
I headed home to make my supper; one of my guests was coming from Paris, which you might think was a big deal — but then it’s only two hours away by train, isn’t it?
Of course, London isn’t perfect. Borough Market is under threat from Network Rail (www.sabmac.co.uk — please sign the petition), and it’s fair to say that if I’d been in New York City I could have done my shopping at the Greenmarket in Union Square. But — and don’t get me wrong, I adore New York — it wouldn’t have been the same thing. And, yes, my friend could have come from Paris, too, but I reckon jet-lag might have taken the sparkle out of his conversation.
I left New York when I was about 18; I came to Britain to go to university and never went back home, as I admit I still think of it. I moved to London more than 12 years ago and don’t see myself leaving anytime soon.
There are many things about New York that I miss. I miss the Brooklyn Bridge. I miss Nathan’s hotdogs on the boardwalk at Coney Island. I miss the subway, which is cheap and clean and runs all night. I miss coffee cups that say It’s Our Pleasure to Serve You! in faux-Greek script, and I miss the Staten Island Ferry, which now doesn’t cost a dime. There are times when I wonder what the world and his wife are on about when they hymn the superiority of dirty old London over any other city. Not long ago there was a travel piece in The New York Times advising visitors to London on how to get a taste of the vibrant nightlife: go to Leicester Square, said the writer, at 11.30 on a Friday night. You what? Rejoice at the streets awash with puke! Chortle as you take a stinking night bus home! I ask you, as they say in New York.
And yet: here I am and here I remain. For London, as the great city’s great biographer, Peter Ackroyd, would tell you, allows of everything. In its disorder, in its sprawl, in its clutter and mess and ramshackle air, there is a sense of endless possibility, of secrets ever to be discovered. I don’t love London in the way I love New York, but London never ceases to fascinate me, perhaps because I know that I’ll always be a stranger here. But maybe everyone is a stranger in London; only London truly knows itself.
It fascinates me the more as it has changed over the years. They say now that London has the best restaurants in the world; I suppose that depends on what you are looking for and what your price range is. But it’s not Gordon Ramsay or Richard Corrigan that make me love London. It’s the breadth and spread of the place, its oddness, the fact that it is a city where wealth and poverty still coexist.
When I go back to New York I have a sense of a place that is now almost segregated by wealth. The Upper West Side, where I grew up, would no longer be affordable to people such as my parents were when I was growing up. Of course, London “gentrifies” too: the East End, where I live, has changed immensely since we moved there ten years ago. Yet to me London is still more socially mixed than New York; it’s harder to make assumptions about others, and people are more likely to have a wide, strange variety of friends than to move in small, safe circles.
London is a dainty place, a great and a gallant city; all the streets are paved with gold, and all the folk are witty . . . So goes a song I learnt years before I came here; and now I know it was sung with some irony a couple of centuries ago. But only some. I am glad to be a New Yorker — a New Yorker who lives in London.
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