Just scant weeks before London’s voters go to the polls, the race for mayor of London is looking less like an election and more like a reality TV show, with all the over-the-top histrionics that are expected of the genre. Its two antagonists are hometown celebrities known to all by their first names—Ken Livingstone, the former mayor, a fiery socialist with a penchant for dropping explosive sound bites versus Boris Johnson, the tousled-haired, bike-riding conservative incumbent.
The two have clashed repeatedly over the airwaves and in heated debates, with Johnson accusing Livingstone of being "a fucking liar," which prompted Livingstone to call for an end to the "X Factor slugfest." The BBC recently summed up the race as a "candidates battle for branding supremacy," noting that "Johnson's image has formed a key part of the London race for mayor - from the blue, floppy-haired profile on Back Boris 2012 merchandise to the hairy cartoon character depicted as a thief in Ken Livingstone's campaign literature."
“Whoever wins,” as Fox News has it, “London’s next mayor will be a larger-than-life figure whose gaffes and idiosyncrasies would have sunk a less confident politician. The winner will oversee a world-class city of 8 million people and a 14 billion-pound ($22 billion) budget."
He will also face the deepest challenges that London has faced since the Great Depression and post-war years.
The city has been buffeted by the financial crisis, suffering more severe blows than most cities, from which it is still suffering. London ranked a woeful 123rd out of 150 global metros on its economic performance during the recovery according to a recent report by the Brookings Institution and the London School of Economics. This has not been lost on Londoners. Roughly six in ten voters cited the economy as their most important concern in the most recent Ipsos MORI poll.
For roughly a century, until it was eclipsed by New York in 1925, London had been the world’s largest city by every standard. While it still rates as the world’s financial capital (it topped the 2012 Global Financial Centres Index, for example), its economic power has been waning. It slipped to second place on two recent rankings of global economic competitiveness, and it ranks third on my own Global Economic Power Index, after New York and Tokyo.
McKinsey Global Institute forecasts it falling to fourth place in economic output and 14th in population by 2025. If London is to remain near the top of the rankings, the next mayor will have to spearhead a plan to stave off growing competition from a host of global cities.
He will also have to spearhead a plan to diversify the economy. London's economy is overly dependent on finance – far more so than even New York. NYU economist Thomas Philippon’s research finds that the finance share of national economies typically shrinks in the wake of economic crises. Not only has finance been weakened by the crisis, it is likely to shrink as a result of foreign competition and more aggressive regulation.
Media and entertainment, once staples of growth in London, have also weakened. The former has been tainted somewhat by scandal, the latter faces increased competition from New York, Los Angeles and a range of emerging global centers.
While London is clearly gaining strength in high-technology with the rise of its so-called "Silicon Roundabout," it lags far behind Silicon Valley and New York. New York’s Michael Bloomberg has moved quickly to bolster his city’s technological capability, leveraging a massive new technology complex with Cornell University and the Technion.
Though London’s world-class universities give it considerable strength in science and technology, great universities alone do not make a high-tech economy. Real commercial success requires that they be part of a broader cluster or ecosystem, as is the case with Stanford University and Silicon Valley that incentivizes rewards and funnels tremendous energy toward entrepreneurship and new business formation. The key factor in becoming a successful startup hub, writes the venture capitalist Paul Graham, turns on “being in a place where startups are the cool thing to do, and chance meetings with people who can help you. And what drives them both is the number of startup people around you.”
To do this, London’s next mayor will have to beat back mounting anti-immigrant sentiment. Leading high-tech clusters are driven by immigrants: More than half of Silicon Valley start-ups have an immigrant from outside the United States on their founding team, according to several studies.
London’s next mayor will have to work hard to forge new and better connections between its universities and the private sector, advocate for a culture of entrepreneurship and risk-taking, and ensure that the city stays open to foreign talent.
Congestion and transit will also be high on the list of priorities for the city’s next mayor. Most people think of congestion as a nuisance, but it is much more than that. Innovation and economic growth turn on interaction, density, and a speedy flow of goods, people, and ideas around the city. London’s development has left it stymied by traffic and in a state of near-perpetual gridlock.
The city has led the world with congestion pricing, but it needs to do more. Mass transit has featured largely in the campaign; that Ipsos MORI poll confirms that the issue is of vital interest to voters, more than a third of whom (38 percent) put it at the top of their list of priorities. Both candidates are making extravagant promises in this regard; whoever wins will need to follow up with a real plan to limit congestion and improve transit while increasing density.
But the greatest challenge facing London’s next mayor is the ongoing political and social fallout from its growing class divide. This divide is etched deeply into the city’s physical fabric, as the ultra-rich increasingly colonize its inner city, pushing the poor further into the outer reaches. And it is reflected in the skyrocketing real estate prices in the city’s poshest and priciest neighborhoods – which have become the preferred locations not just of wealthy Londoners but of the world’s super-rich. Thirty-seven percent of the Londoners polled by Ipsos MORI said the city needs to build more affordable housing.
A product of the city’s very success as a global economic and financial center, this economic and geographic divide exploded into the riots last summer, which, as I wrote here, at the time appeared to be more of a “feature than a bug” of its new reality.
Whether Boris or Ken, London’s next mayor is going to have to thread this needle — to make the city even more attractive to global talent and business while at the same time improving its livability and affordability for ordinary people. It's a daunting challenge — one that the city’s future prosperity turns on.
Top image: Reuters/Toby Melville