London Economic Centralisation: A New Era Unfolding
London, the bustling metropolis that never sleeps, is undergoing a transformation unlike any seen before. The London Growth Plan, a recent publication, describes the city’s economy as a vast galaxy, not merely a star. This new era is characterized by a shift towards “polycentric growth,” a concept that deviates from the traditional focus on the city center to encompass city-wide commercial and industrial development. This shift promises to bring economic prosperity to all Londoners, a promise that has long remained unfulfilled for many.
As the City of London Corporation unveils its ambitious plans for a new Square Mile skyline, adorned with high-spec roof gardens and towering glass structures, some skeptics are already dismissing the city’s polycentric vision as a fleeting dream. However, a recent report from the Centre for London think tank challenges this notion, particularly emphasizing the potential of west London to spearhead what Mayor Sadiq Khan refers to as “good growth.” The report argues that the current monocentric model is outdated, with diminishing economic returns and stagnant growth necessitating a fresh perspective.
Challenges to the Monocentric Model
The traditional reliance on a centralized service sector in London’s Central Activities Zone (CAZ), which includes the Square Mile, the West End, and Canary Wharf, has long been the cornerstone of the city’s economic prowess. However, the Centre for London report highlights the pitfalls of this monocentric approach. While the CAZ accounts for a mere 2.2% of Greater London’s area, it contributes a staggering 48% to the city’s Gross Value Added (GVA). Nonetheless, the report underscores that this concentration of economic activity has led to substantial socioeconomic and geographical disparities, even amidst apparent prosperity.
The City Corporation’s focus on high-end office developments within the CAZ reflects a commitment to maintaining global competitiveness. With demand for prime office space surpassing supply, the allure of substantial returns is undeniable. However, the Centre for London report warns against perpetuating this outdated strategy, pointing out that London’s overall productivity growth has dwindled to a mere 0.1% since the 2008 financial crisis, falling below the national average. The report advocates for a more diversified, polycentric approach to economic development to foster inclusive growth across the city.
Embracing Polycentric Growth
Beyond the confines of the CAZ, west London emerges as a beacon of economic promise. Generating a GVA of £70 billion, west London rivals cities like Manchester and Leeds combined in economic output. The region is witnessing a surge in high-growth potential businesses, outpacing central London, and experiencing accelerated growth in household incomes. The report urges a departure from the pre-pandemic norm of commuting from outer regions to the city center, emphasizing the need to unlock economic opportunities closer to home.
The London Growth Plan, a collaborative effort between City Hall and the boroughs, echoes this sentiment, emphasizing the importance of polycentric growth in shaping the city’s future. Suburbs like White City, Battersea, and Stratford are already witnessing economic revitalization, with the identification of industrial innovation corridors poised for expansion. Major projects such as those in Old Oak, Park Royal, and the Royal Docks underscore the city’s commitment to diversifying economic activity beyond the CAZ.
As London prepares for the upcoming MIPIM event in Cannes, where developers and investors converge, the battle for attention and investment intensifies. While the City, the Mayor, and the boroughs present a united front for the city’s prosperity, challenges persist. The allure of the CAZ continues to overshadow emerging economic hubs, leading to vacant spaces and stalled projects in peripheral regions.
In the face of these challenges, the London Growth Plan advocates for a balanced approach that supports both a thriving city center and widespread economic growth. The stakes are high, as the city seeks to create a better life for all Londoners by expanding growth opportunities beyond central London. The forthcoming MIPIM deliberations will offer insight into the city’s economic trajectory, revealing whether the winds of change favor a more inclusive, polycentric future for London.
