


A precarious brilliance

In praise of the world’s most international city. If only the rest of Britain properly appreciated it

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Readers' comments



"The cost of housing is not just a problem for Londoners, but also a tax on business. Higher property taxes, which are desirable on wider economic grounds, would cut demand for property as an investment or a second home"

Bravo, it is about time this problem is addressed.

Austrian Smith


Central London has become a ghost town as rich foreigners buy property and tuck their money away. The mansion tax will take its toll and given the government has too much debt it is only a question of time before the tax is applied to people.


"If it were not for London, Britain would be off the map for both businessmen and tourists"

Not this (US) tourist. I was raised in the UK but now live and work in the US. Over the last 20 years, I have made six trips to Britain (usually 1-2 weeks at a time), and never once been to London. Not that I am consciously avoiding it... I'd spend more time there if it were closer to Devon, Yorkshire, Lancashire, Cheshire, and Wales. Or if I worked for a company that gave me more time off.

Good article, though. Thanks.


London is a great city and I love the diversity it offers. However,
I think there is a significant risk that it could all end up in disaster:
1) The financial debt of the city/country is 500%+ of GDP. Significant portion of this is leverage the banks have created. The City and the country now depend largely on London and its financial industry. When the world financial markets face day of reckoning for too much debt, I believe London is going to suffer greatly.
2) Significant money flows were people (like Russians) hiding their money with most of the locals no longer being able to afford living in their own city. This is not a healthy situation and will not last forever.

Connect The Dots

One major cause of Greek Debt was the high expense of putting on the 2004 Athens Olympic Games.
Today Athens resembles a war zone threatened by anarchy, angry citizens and brain drain of its youth.
These 2004 Olympics may have single handedly lead to the Fall of the Euro in 2011.

Is it possible that Olympic Cities post games suffer a Bust rather than a Boom?

Sarajevo hosted the 1984 Olympics and within a decade was an actual War Zone with snipers, genocide and artillery.

London can plunge into anarchy and riot at the drop of a hat as this past summer demonstrated.

Modern Examples include Sarajevo(Civil War and Genocide), Athens(Financial Bankruptcy and Protests), Barcelona(Recession, Unemployment Crisis, Default), Atlanta( Drought, Bursting Overextended Infrastructure, Recession, Foreclosures).

Or historical examples as Berlin in 1936, which was obliterated in WWII along with other Gleaming Olympic Cities of Paris('24), Amsterdam('28) and London('44) and Tokyo('48, though canceled).

Or a different problem. As Garmisch, Chamonix, Cortina d'Ampezzo, Lillehammer, or Calgary fade back into obscurity and backwater.

And the newest major Olympic endeavor is counterterrorism. It is a magnet for the most ambitious blood thirsty terror cells--kind of like their Olympic games.

Europe is again under Dark Clouds.
The Olympics can be a curse or a blessing. It is not guaranteed.
The Olympics may not prove to be a universal panacea.
At best it is a mixed blessing.

A simple qualifier for success: if there is no subsequent war that destroys the city, then these Olympics ARE A HISTORIC SUCCESS.

Good luck!

GSamsa in reply to Connect The Dots

I like it how you mention those cities, but completely ignore the success stories: Los Angeles, who've hosted it twice and whose Olympics are considered the most financially successful; Salt Lake City, Helsinki, Mexico City, Oslo, Sydney, Seoul, Torino, Innsbruck, and Vancouver. Or, as far as bad examples are concerned, you completely ignore the Montreal Olympics which is the classic case of Olympics resulting in disaster for the host city.
On that point, what's also more funny is that you've never seemed to heard of "coincidence" which is 100% exactly befell all of the cities you mention more than anything.

pwibble in reply to Connect The Dots

Hmmm. Don't think Amsterdam was "obliterated" in WWII. Its Olympic Stadium from 1928 is still very much actively in use as a sports venue and hardly any other buildings were destroyed. The human cost of WWII on Amsterdam was terrible of course.

Connect The Dots in reply to GSamsa

"Salt Lake City, Helsinki, Mexico City, Torino, Oslo, Innsbruck, Montreal..."

Or a different problem. As Garmisch, Chamonix, Cortina d'Ampezzo, Lillehammer, or Calgary--once glamorous and hip OLYMPIC CITIES-- now fading back into obscurity and backwater.

Liveinhope in reply to Connect The Dots

Oh c'mon grow up Connect-the-dots
Greece was a disaster waiting to happen. They had hardly any Industry. They were borrowing in a market where risk was heavily under priced.
They had borrowed an amount of money that would never be called wise. They were paying pensions to people who had never payed tax to the Greeks.
But most of all the only real industry they have is Tourism.
and the UK, with the second largest Capital market and the 7th largest manufacturing export is in the same class of the Greeks??
You must read more !
get a balanced life friend !!!


The issue of immigration is actually quite straightforward. Londoner's like immigrants because they see good ones - bright, hard working, enterprising. The rest of the country dislikes them because they see bad ones - living off the state or doing low grade manual work. To solve immigration to everyone's satisfaction is easy. Make immigration easy - for the immigrants we want. Make immigration (especially bringing wives/husbands from the bad parts of Pakistan) hard for those immigrants we do not want. A properly constructed points system is all that is needed. But it will be discriminatory - it has to be designed to be so. Which may need a change in a lot of laws.

Ohio in reply to IanBio

It's hard to discrimate between good and bad immigrants. The most successful systems seem to use a mix of skills and money. Charge a stiff fee for a work visa unless you have a desireable set of skills that you bring with you. No quotas, no allowances for relatives. If you've got needed skills or a wad of money to pay for the privilege, let's roll out the welcome mat.


Finance is to the UK like oil is to Saudi Arabia. It brings in a lot of money, which sounds nice but jacks up the currency and makes all other forms of economic activity less competitive. It creates a small elite with a lot of wealth, but there is very little trickle down effect to the rest of the population. It attracts the best and brightest graduates, leaving fields like medicine, manufacturing, and public service less efficient and less competitive. It creates a financial sector too large and powerful for the government to regulate, and thus captures that government as a client. And finally it creates a two tier country, with the great majority suffering in decline while being told they must do whatever they can to support the rich elite -- after all, that rich elite is such a big part of the economy!
The power and size of finance in Britain is corrosive to the non-finance economy for economic reasons, and corrosive to British democracy because of the divergence between the elite and the plebians. Instead of pandering to the financial industry, UK politicians would be well advised to treat it as a cash cow. Tax the bankers until it hurts. Regulate the systemic risk out of them. If some of financiers end up leaving, no great loss. Perhaps the UK could return to a normal economy and a normal democracy, rather than one which exists to serve the financial plutocracy. And perhaps the English could once again afford to live in and visit central London.

Canuk in reply to Ohio

I very much agree with everything you have to say here about London / England and would only add - whatI would we expect of a group of London governing elite's who have found a way to "extract" all of the additional wealth created in the UK over the past decade or so for themselves with the full support of the establishment however defined - private (Eton tc.) schools, oxbridge, judges, public servants (BoE / Treasury/ IR Tax), politicians of all colours, monarchy, financail media, both London Mayors along, of course, with the actual perpetrators, the accountants and lawyers all cheering along the fundamentally morally corrupt "banksters" in order grab their "fair" share of the gravy train that has fallen into there laps.

This is why I suggested a few weeks ago that Hollande had got it right when he highlighted that "Finance" was his (the "Real" political economy) greatest enemy and while I fully understand the point you made in response, I believe your comments here and my own view, expressed many times in this paper, that until the 15 or so leading banking (speculative market) trading rooms, starting in London and New York, are virtually closed down, there will be no economic and social justice really prevailing throughout UK / US civil societies.

The fundamentally morally corrupt Dimons and Diamonds of this world and their London, New York and Washington cronies, who clearly are lying when they say they did not Know what was going on in their own speculative trading rooms, have been allowed to get away with it for far to long, but sadly, I am not holding my breath for any real form of sanctions being thrown at the lot of them, by the current leading governing establishment elite's of either country, who have to much to lose at this time in history.

Ohio in reply to Canuk

I don't know that you actually need to shut them down. Finance is an important tool to run the global economy. I think you need to regulate finance to tame it. Finance should be part of the engineroom of business, an important utility which functions to distribute capital to those enterprises which are the most deserving. But finance has become the captain in charge, rather than a useful mechanic. And far too many of those captains have decided to raise the Jolly Roger and throw caution to the winds, steering far too many ships of enterprise onto the rocks.

The key lesson that the last couple of decades should have taught us is that when we allow 'creative' finance, when financiers are allowed to introduce ever more complex, less liquid, and less transparent instruments, the only beneficiaries are the financiers. They're like snake oil salesman with one useful drug to sell, who invent 25 different ways to sell it to better profit from their customers' ignorance and confusion. Finance has very little to offer which was not available 30 years ago, minus the computers. If we restrict finance to boring, transparent, simple and predictable products we will find business equally well served for their financial needs, but with a much smaller chunk of the economy consumed paying rents to financiers.

Canuk in reply to Ohio

Again - agree - but I feel we have to be careful how we define "Finance". The form of finance you are describing is very far away - as you mention - from the actual speculative trading practices of the global financial markets where tens of thousands of speculative traders in over 250 banks in London alone, all completely disconnected from the real political economy of the UK and its civil society, go about their business which they call "Finance" undertaken by "Investors" as the financial meadia calls them, including this paper.

In the same way the non banking speculative traders go under the name they have created for themselves to confuse the general public called "Hedge Funds".

This, I believe, is the form of "Finance" that Hollande alludes to when he uses the term not the kind of "Finance" that - should be part of the engineroom of business, an important utility which functions to distribute capital to those enterprises which are the most deserving, which you wisely describe.

I am sure you are aware of the "Finance" role of KFW in Frankfurt which, along with the other 700 odd locally owned and controlled banks in Germany, are everything that a "real political economy" could wish for, and in my view, easily explains why Germany today has one of the strongest and most sustainable political economies in the world.

Compare that approach with the way the "banksters" in London and New York go about their contribution to the role of "Finance"and it almost wants to make you cry.

However, with apologies for repeating myself, unless this form of global financial markets underwritten by London, New York and Washington are regulated out of these speculative trading practices which we now know creates nothing "useful" for civil society, they will take every advantage to continue to overwhelm the real role of "Finance" in our political economies to the great detriment of the 99%.

Stateless in reply to Omiccron

I'd agree with much of what Ohio said. Although on the other hand, many people who agree with these points turn around and in the same breath say "the banks arnt lending enough to small businesses". Well if you "regulate" the banks to "tame" them, which presumably means much lower leverage there will be less money to lend to small business.

So I challange you to pick a side, more regulation or more lending to small businesses? You really can't have both

Ohio in reply to Stateless

Large investment banks have never lent to small businesses. That is done by savings banks with local branches. The princes of the city of London 'package' loans to corporate behemoths and governments, 'manage risk' through ever more complex derivatives, and take a shamefully large rent every time the client's money passes close to them. A City of London bank wouldn't be caught dead making a small business loan.

Stateless in reply to Ohio

Ohio, I have read many of your posts and where I don't always agree with you agree with you, you always make valid points. However your comment above shows the exact ignorance I was referring to.

Yes I know investment houses dont make small business loans, but in a fractional reserve banking system there is an upper limit to how much money can be lent by retail bank. However If a retail bank makes a loan to a small business and subsequently that loan is bought by an investment bank to package, then that loan is removed from the retail banks balance sheet.

Consequently the retail bank has less loans in its loan book and can loan more money.

When executed well this is an excellent idea, but it wasn't

mb2bm55 in reply to Ohio

"Finance is to the UK like oil is to Saudi Arabia"

In the sense that its the only substantial international industry the UK has left. Poor government policy has driven much of the industrial base out of the country. The UK used to be one of the greatest manufacturers in the world. Now? Do they even own any of their domestic car companies anymore? Even if the UK produces more technical degrees the graduates are better off going overseas to the U.S. or the Continent for work.


You mention London's "ability to attract the rich" could this possibly have anything to do with the UK policy of subsidising the rich through its "domicile" tax policies? This means that rich foreigners benefit by being only taxed on their income arising in the UK and not on that arising outside the UK in contrast to the tax regimes in most of their home countries, and of course the taxation of rich UK citizens living in the UK. Those in "foreigner free" areas may resent this subsidy of the rich by the poor. Those UK citizens who live in London may benefit or hope to benefit from the largesse of these foreigners. Could this in part account the differences in intensity of that dislike within the UK? It is a poor country that has to rely on bribery to persuade rich foreigners to come and live there. Of course there are other advantages such as super injunctions aquired by highly skilled and expensive UK lawyers thar of course help in being ensured a quiet life as well.Sadly the UK once an innovative and proud manufacturing nation seems now well and truly dependent on the City, its foreigners, and the rich foreigners engaged in its activities. Woe betide the political party that challenges them. That of course bring me to the issue of the Financial Transactions Tax...

jingBrit in reply to MabN

What a daft comment.

Where exactly is the subsidy in not taxing rich foreigners residing in the UK? Most of the services they use are most likely private.

And the notion that they don't contribute any taxes is nonsense. For one, they pay VAT on their presumably quite lavish consumption.

What is a real drag on the country are people who want to tax the industrious and the wealthy into oblivion.

Omiccron in reply to jingBrit

What rich are we talking about?

Rich entrepreneurs and industrious people or rich who just live from rent?? Cuz it's not the same at all.

There is a persistent myth that rich people necessarily create wealth: nothing is further from the reality. Rich people generate wealth when they invest in real economy and make it possible to materialize new ideas. When their money is placed in real estate or offshore funds, they help creating specultive bubbles, rising prices, rising inequalities, nepotism and a general feeling that the system always benefits the 1%.

The problem's when governments, mainstream media and the financial elite share a common interest in making us think the other way round.


Wait until post-Olympics depression sets in.


the young of england are getting raked over the coals. allow rich immigrants and the poorest, but dont allow housing to be built. young brits live in squalor, while those who own a house get ridiculous rents. and all this just to protect a "green belt". nonsense, my heartfelt sympathy to britains young.

Mr. Marcus in reply to kentuckian

I think you need to come and have a look at the skyline for a change. The number of cranes marching on is impressive and no it is not just follies and office blocks. Three huge tower blocks have just opened near mine. Another one is under way and they have just bought the land for a fourth. This is on top of the seven blocks completed on my road in the last six years. Some of these are reserved as low income housing. This pattern has been repeated across the boroughs.

I completely disagree with both T.E. and you on the green belt. It was set up to prevent the urban sprawl of London reaching the coast and swallowing the entire south east. Furthermore it is the M25 orbital transport corridor. My heartfelt sympathy for a rant at a city you have clearly never even visited.

Omricon in reply to Mr. Marcus

I live relatively close to London and I agree with the author that green belt land needs to be built on. The only reason it is not is to protect ever increasing house prices of London suburb dwellers with important jobs in the city (or inheritances) and does no economic good at all.

Mr. Marcus in reply to Omricon

You are of course absolutely spot on. I had not considered the zionist-crusader alliance entrenched in a sub-urban fortress, forcing their puppet, parliament, in the creation of green belts so that they can unlock value on their property at retirement. Down with open spaces and all the bourgoise horror that comes with it.

But why stop there. We must build on all the parks, buldoze all that wasted land in cememtaries. What about the forests? I say they are an evil Tory conspiracy as well. And don't get me started on the rivers and coastline.

Omricon in reply to Mr. Marcus

This is nothing to do with conspiracy theory it is simply the older generation protecting their assets at the expense of the younger. Again something dealt with by TE in various posts.
Your argument is a logical fallacy because it says that if I am right then we must tarmac everything (which is of course nonsense). The BBC recently wrote an article which calculated that Britain was only 2% cemented over (roads and buildings). There is plenty of space for growth without bulldozing parks. For a start they could relaunch the scheme which saw Milton Keynes and Basingstoke being built and build further commuter cities out of existing villages and towns.
Most 'greenbelt' land isn't even green! It was simply given that designation to stop London from growing which is now pretty much seen as a mistake. If the UK economy is to grow then London must grow and that means more commuter town and higher apartment blocks. Look to Singapore for a great example of high urban density combined with beauty, greenery and parks.


"...in the 1980s the Big Bang liberalised the financial-services industry...."

In RetroSpect, I Do NOT Think that this was such a GOOD Thing!

We are ALL Now, Reaping the Rewards of this Liberalted "financial-services industry"!!
We are ALL Now, Suffering the Side-Effects of that "Big Bang"!!!

While the EU is on the Brink of an Economic Disaster, London is Looking So-So!!!!
While the EU is on the Verge of Eventual Dissolution, London should Enjoy it's Moment in the Sun!!!!!

Peace, Love & Respect.


Londons biggest problem is the crowded tube, its why I left. London feels like a depressing third world country two hours a day.

E-Pen in reply to DriftWood79

Cycle. The city is really, really manageable overground if you don't have to sit in long lines of traffic or queue for buses. Rode from Victoria to Soho in 7 minutes this morning. No sweat.

Paul Danon

Nice to hear London praised for a change. The rest of the UK (especially outside England) tends to see it as leeching-off the nation, yet it's its powerhouse and breadwinner. Housing is dear and living is hard; provincials need to be grateful and stop getting subsidies. However, London needs the Libor-affair like a hole in the head.


There are 8 million people living in London.

The filthy rich foreigners are a very small proportion of that. Most of the foreigners - and indeed native Britons - are like me - educated, hard working, love living in a vibrant international city that is challenging, but where success and nous is rewarded, where you can be yourself or remake yourself as you wish. Where you can be an active participant in your local community or the wolf who walks alone - you choose.

There are huge swathes of London where people raise families, commute to work, sing in choirs, do voluntary work... basically live ordinary, happy, fulfilled lives.

I have family ties to Australia, Italy and the midlands, but London is where I CHOOSE to live. It's a fantastic city.


A country relying on its capital city
A capital city relying its financial services
Financial services relying on volatile capital
Volatile capital going East...

It sounds like a "brilliant" strategic mistake. Bred for today, hunger for tomorrow.

VLCC in reply to Omiccron

You're wrong.

Only 15% of the economy is financial/business services - and it's not just in London. We are also the 6th/7th biggest exporter of manufactured goods in the world.

If you look at the facts, our financial services industry is much less transferable to the East than Germany's manufacturing base. Of course Asia is growing and with it financial services but you misunderstand what that means. London and the rest of the UK stand to benefit from all that if it stays an attractive place to do business.

Look at it another way, if foundations for the City are so volatile why has it remained a (if not the) leading centre for financial services for hundreds of years? That includes during world wars, etc.

Every country needs to promote what they're good at. We do financial services; the Germans do heavy engineering etc. The reverse would be a nightmare.


Come Olympic,this time, Niro will be running around, torching London ablaze...

Guy Hamilton in reply to Inshai

Obviously, I know who Nero was. He was the emperor who, legend and only legend has it, fiddled while Rome burned.
As I say, that was Nero. But who was the "Niro" to whom you refer?
Who is it to whom the remark about schools could best be applied, to me or to someone who can't spell and doesn't understand jokes?


Whilst everybody think money are going east, do anyone aware the aggressiveness of China? They don't want every penny stay with them. They investing elsewhere, like Glencore, Rio tinto, LME, offshore RMB centre.... London is one of the city on their list... So ultimately Londoner get to welcome outsider. Driving up the property price is not the only thing migrant has done. If not the money from non-briton, most of the football club in Premier League will never be the shape that you are seeing today. Some will even bust.


London is a parasite feeding off the rest of UK for resources.
Everything in the UK (Transport, Currency, Interest rate policy, for example at 14% in the 90s) is done to protect and promote London.

jimquad in reply to Zod

Not really true. Due to being the capital almost every organisation I correspond with has London as its HQ. With everything based in London from National charities, government, foreign government, the national media, civil service, National bodies/regulators, national centres of excellence the list goes on.....London is given a huge financial transfer from the entire nation.
If London was ditched then we would probably make Birmingham the location for these national bodies.

guest-islisms in reply to jimquad

centralisation is not healthy in the end. It concentrates too many activities in a small area. Countries like Germany, Switzerland, USA, even China,India, don't have this centralisation and i think that is better in the long run. One time i met a French chopper-pilot near Marseille. He told me there was no job forr him other than in Paris. That's centralisation. I think it works in the UK the same with London. Maybe they should move the entire goverment to the North or middlee of the UK. Now London absorbs most of the work and most of the profits in the UK and serious amounts from abroad as headquarters, government, important cultural and educational institutions, finance are all there. It makes everything expensive in one place while there is not enough work and opportunities elsewhere. It's not healthy in my opinion.


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