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For London, 2017 Could Be the Year That Makes or Breaks the City's Future

The U.K. capital debates the impact of Brexit—and much more.

Fireworks explode around London's Big Ben during New Year's Eve celebrations. (Stefan Wermuth/Reuters)

We asked contributors to tell us what issues and challenges are most likely to shape 2017 in their metropolitan areas.

As 2017 begins, London is at a crossroads. Still pretty much the unofficial capital of Europe, the city is now locked inside a country that is firmly set on untethering itself from the E.U. This goal of unwinding more than 40 years of laws and co-operations looks liable to siphon much of Britain’s cash and brainpower for up to a generation, but that in itself won’t change the country’s course. So what will happen to the city at the heart of it all?

Will London become a figuratively smaller, more provincial place more oriented toward its national hinterland? Or will it manage to negotiate special exceptions that allow it to function as a form of city-state, and thus remain a viable home for Europe-focused companies and institutions? The answers to these questions won’t be fully formed in 2017, but we should get an inkling of the city’s future course within the next 12 months.

London is likewise reaching make-or-break time with key issues such as housing, affordability, and the devolution of power. This should make the upcoming year possibly the most fraught, but also potentially one of the most significant the city has faced in decades.

What Brexit means for jobs and workers

Taking center stage in the media debate (if not necessarily in the minds of ordinary Londoners) is the issue of whether or not London will be allowed to retain special commercial links with the E.U. Currently, “passporting rights” allow U.K. businesses to offer services across the E.U. Without a good Brexit deal, London businesses could lose these rights, but the city’s importance as a financial center could buoy the case for an agreement that is advantageous to both sides. CityLab discussed this in mid-2016, but so far the U.K. government’s statements on future Brexit plans are extremely tight-lipped and studied in their meaninglessness (Prime Minister Theresa May’s call for a “red, white and blue Brexit” being a notable low), so we still have no idea what deal will be struck. This official obscurity nonetheless seems to be inspiring an answer of its own: banks are now mixing warnings of jobs departing London for the E.U. with actual plans to move them.

Losing these jobs could be a crisis for the city. Some won’t be all that sad to see the bankers go, given their high earnings and contributions to skyrocketing housing costs. But they’re not the only workers to be concerned about. More than 960,000 workers inside London (and another 420,000 in the wider commuter belt) hail from other E.U. states. They exist within all social levels, and their status as workers in a post-Brexit London remains uncertain—but the economic and social chaos caused by trying to remove them all would surely be enormous.

As it stands now, more than 1 million people in and around London are entering 2017 with little idea of what their status will be in 12 months’ time. This is only likely to make London a far more tense place in the near future.

Changes to affordability?

If, however, the knock-on effect of the Brexit process is to make London more affordable (and that’s no foregone conclusion), then many will be delighted. Following the referendum, there are already signs of a drop—or at least stasis—in housing prices. Real estate company Savills has noted a 9 percent price drop in London’s luxury property market over the past 12 months. Some downward movement may not be a bad thing, but the key word here is luxury. While the plutocrat market may see a correction, the cost of buying a property will remain way beyond the means of most Londoners, especially as the effects of higher inflation start to kick in.

As we enter 2017, the word on the street from friends is still one of acute housing shortage, with numerous stories of people facing either hardship from high rent, or losing out on jobs if they leave the city. These issues may come to a head in 2017—but then again, people have been saying they will come to a head for years.

Loss of political stature

Even if London turns more inward toward the rest of the U.K. rather than outward toward the world, that doesn’t mean its national influence is assured. There’s a fear within the city that London may become relatively marginalized nationally, as a Conservative government neglects a place that largely voted against it in favor of its electoral heartlands. The idea that this is a bad thing would make Britain’s non-Londoners howl with laughter—the capital has so totally dominated national life for decades that any rebalancing is arguably overdue. And certainly, even Londoners might not mind if such a trend helped rid the city of useless projects such as the star-crossed Garden Bridge.

With the vast cost of Brexit looming, it’s likely that cuts to London’s portion of budgets for national policing, public services, and arts could lead to some shrivelling of public life. If New York is still the Big Apple, London in 2017 risks becoming the Big Prune.

London Mayor Sadiq Khan, pictured in September. (Reuters)

Cause for hope

All that may make London’s imminent future sound gloomy, but rest assured that the picture isn't entirely negative. Despite a rocky ride, London continues to boom, with a population growth rate double that of the rest of the U.K. Most of this comes from births rather than people choosing to move to the city, but while it will continue to put pressure on city resources, it’s hardly a sign of failure.

What’s more, London is finally getting better political leadership. Since being elected in May, Mayor Sadiq Khan has made many promising statements—and even started acting on a few. In November, he announced plans for 90,000 new homes, shared variously among the low-rent and shared ownership sectors, as well as a new “living rent” category where tenants would have their rent pegged at 35 percent of income. City spending on cycling will double. Also due to kick off in 2017 is work on some much-needed new river crossings in East London, though the city will have to wait until 2018 for the most radical change of them all: the arrival of a major new heavy rail commuter network called Crossrail.

This all sounds great. The power of London’s mayor is nonetheless nothing like that of his counterparts in Paris or New York. He has less cash and less say than either Anne Hidalgo or Bill de Blasio, remaining a predominantly advisory figure with few tax-raising abilities and limited executive power. So while he is able to shape the path of future housing policy, for example, he can only do so by recommending actions to others, rather than funding construction directly (something London’s boroughs can do).

Central government still holds the reins—and a recent spat shows by just how much. This autumn, Britain’s national government quashed a plan by Khan to take over a notoriously dysfunctional commuter rail service. A leaked letter revealed that the government’s reason for this refusal was not made solely in the interests of commuters, but to keep the service away from officials from the opposition Labour Party. There seems to be a national interest in keeping London’s wings clipped.

Thus the debate about London’s immediate future loops back to the same issue yet again. Is the city going to get more of a chance to pilot its own destiny, or will it remain under the thumb of the national bodies it houses? In a polarizing world, this is a debate that cities everywhere will be having in 2017. But while the path ahead seems uncertain, it’s far from entirely negative. London’s next year could be tough, but it could also still be one of the best, most invigorating places from which to watch the changes currently sweeping through the world.

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