London celebrated hosting the 2012 Olympic Games with an opening ceremony that showcased the city’s prosperity and diversity. Much of the exuberant commentary at the time hailed London as the model of the modern global city of the future.
But, in retrospect, might the London Olympics have marked the peak of an era, rather than a new beginning? Four years later, Britain voted for Brexit. In the UK, some have interpreted the vote as a repudiation not just of the EU but of London.
Almost 40 per cent of the city’s residents were born outside the UK and the Brexit vote was widely seen as driven by a desire to control immigration. More broadly, booming, cosmopolitan London has increasingly seemed out of sync and out of sympathy with much of the rest of Britain. London voted to stay inside the EU but was outvoted by the country.
Brexit undoubtedly poses a threat to the future of London. This is a city that is reliant on energetic immigrants, many of them from Europe. Young people, in particular, have taken advantage of EU laws on free movement to relocate to the capital. Immigrants from Europe now staff everything from the hospital emergency rooms, to trading rooms in the City — and the hotels and coffee shops that keep the capital buzzing.
However, the Brexit vote has made many Europeans in London feel uncomfortable about their future. The fall in the value of the pound has also made working in the UK less attractive. If immigration from Europe becomes significantly more difficult after Brexit, London’s public services and knowledge economy will suffer.
Brexit also poses a serious threat to the financial services industry, which employs some 360,000 people in London, and nationally provides about 11 per cent of Britain’s tax revenue. The impact of Brexit on the City will depend on the negotiations and their interpretation by the world’s banks and finance houses. But it is already noticeable that many financial institutions are choosing to expand their presence elsewhere in Europe — in particular in Dublin, Amsterdam and Frankfurt — while freezing or reducing employment in the City.
Some might welcome a certain slowing of the economy. The decades-long boom in financial services has been accompanied by rising inequality. Concerns about social injustice have grown after the tragedy of the Grenfell Tower fire, which claimed about 80 lives in a poor part of a rich city.
The argument that London has neglected the interests of the poor in favour of the super-rich is heard often. Concerns about soaring housing prices have also begun to preoccupy the comfortably-off middle-classes, who worry that their children may never be able to afford to live in the capital.
But the argument that a weaker City might actually benefit London is flawed. London’s tax base is dependent on the income generated by financial services and the welfare of other big employers is closely connected to the City. Hopes for more social housing and better public services will be thwarted if the tax base shrinks.
The impact of Brexit on the City will depend on the negotiations and their interpretation by the world’s banks
There is an argument that London, as a global city, is better placed to ride out Brexit than some parts of the UK that voted to leave the EU and depend more on manufacturing exports to Europe. Nonetheless, Brexit seems almost certain to inflict an economic and psychological blow on London. A city that has positioned itself as the world’s gateway to Europe and Europe’s gateway to Britain will be excluded from the EU.
Yet with tough times on the horizon, it can be comforting to take the long view and to draw reassurance from London’s history of inventiveness and resilience. The city’s strength as a political, commercial and financial capital predates not just the EU, but also the empire, with institutions such as the Bank of England, Lloyds’s insurance market and the Royal Exchange all founded before 1700.
The history of London’s resilience is visible in its architecture. At the heart of the financial district lies the Monument to the Great Fire of 1666, which destroyed much of the City. Less than a mile away is St Paul’s Cathedral, the subject of a famous photograph showing the dome intact amid the smoke and flames of the Blitz.
Walk north for half a mile and you will reach Charterhouse Square, used as a burial ground for plague victims during the Black Death and now home to fashionable hotels and restaurants. Two miles west is Banqueting House, where King Charles I was executed in 1649 — a reminder that London is also no stranger to political turbulence.
If London can survive fire, plague, aerial bombardment and revolution over a history spanning nearly two millennia, it will surely survive Brexit too.