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    By Greg Clark Tim Moonen and Jake Nunley.

    The findings, interpretations and conclusions are those of the authors and do not necessarily reflect the views of the European Investment Bank. 


    >> Download the entire essay as eBook or PDF


    Europe’s largest metropolitan area has undergone profound changes over the past fifty years, effectively evolving from an under-governed and depopulating national capital to a diverse global centre that benefits from high-quality integrated systems management.

    In the 1970s, London felt the effects of deindustrialisation first-hand, as its principal ports moved downstream. As the city’s manufacturing base declined, thousands lost their jobs, setting in train a process of mass emigration. By 1981, over 2 million people had left the capital, and the containment of growth by London’s Green Belt encouraged "leap frog" development into towns far beyond the city limits. The 1970s also saw a cycle of rapid social housing construction, which later became inextricably linked with disaffection, poverty and crime and resulted in outbreaks of violence and rioting into the 1980s. 

    By 1985, London’s population had reached the lowest level seen in 100 years, and in 1986, city-wide government was abolished, leaving the city without a central administration. Recognising the urgent need for action, central government established a new urban development corporation to activate growth in derelict brownfield areas. It was in this context that London became the poster-child of post-industrial development.

    This coincided with the "big bang" deregulation of financial markets, which enabled London to leverage its strategic location in the European and African time zone and its proximity to European markets. London quickly established itself as one of the world’s three leading financial centres. By the latter part of the 1980s, population decline had stabilised, and the economy had begun to grow again, as gradual improvements in schools, safety and public spaces began to attract talent back to the urban core. But governance was still a pressing issue, and it was increasingly apparent that the city’s infrastructure was not of a scale or quality that could match its emerging status as a global financial hub.

    >@EIB
    ©EIB

    Infrastructure became a key priority in the decades that followed. Throughout the 1990s, large-scale projects focused primarily on improving the city’s transport infrastructure, by introducing new metro-rail links (such as the Docklands Light Railway) and extending and expanding the city’s airports. By the late 1990s, projects also included high-speed rail links, including the Heathrow Express and the Channel Tunnel Rail Link, which were designed to further increase the connectivity and accessibility of the city, particularly to Western European centres such as Brussels and Paris.

    In recent years, infrastructure delivery has been scaled up once again. Innovative funding mechanisms have been introduced as a result of the increased costs the scale-up has entailed. Crossrail, Europe’s largest ever construction project, has been delivered through an innovative mix of business rates levies, developer contributions, and predicted future revenue. The increase in scale of these transport improvements has also necessitated the supplementing of transport infrastructure with other critical infrastructure. Recent years have therefore seen a renewed focus on social and affordable housing and the construction of a new mega-sewer tideway tunnel designed to enhance water treatment in the city.

    Over the past decade, the UK government has decided to manage the stresses of London’s world city growth path, rather than to intervene and change the formula for success.  It has focused primarily on promoting London as an international city and has sought to manage the growth it brings by improving public service delivery, social inclusion, and quality of life. This has been greatly aided by a coherent metropolitan-level government that has gained incremental powers since its formation in 2000.

    By 2015, London’s population had reached 8.6 million – the highest level recorded since 1939 – and was growing by 100,000 people per year. Notwithstanding the uncertainties surrounding Brexit, London continues to maintain its position as the world’s leading investment destination, with more international retailers and ultra-high net worth individuals than any other city worldwide. It is also routinely ranked among the top performing large cities in terms of quality of life, infrastructure and accessibility.

    The findings, interpretations and conclusions are those of the authors and do not necessarily reflect the views of the European Investment Bank. 


    >> Download the eBook or PDF


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