Many industries that used to dominate London’s economy – and have contributed to its wealth – have left the capital for places where tasks can be completed more cheaply.
The tendency for high value services (professional, creative, financial) to cluster in a few global cities over the long term is quite remarkable. Global city success factors Agglomeration effects This concentration of decision-making functions has been confirmed by an extensive analysis of the branch structure of 175 top professional services corporations by scholars at the University of Loughborough, and by recent surveys suggesting that 40 per cent of the 250 top global companies chose London for their global or regional headquarters. Financial and professional service firms are seen as an essential component of London’s global reach (even though they only employ circa 15 per cent of London’s workforce), because their structure is heavily skewed towards London and a few other cities London’s stock market is not the world’s biggest, but it is the most international in character. Sociologist Saskia Sassen explored how advanced service firms concentrated their executive offices in New York, London and Tokyo from the 1980s onwards – giving these cities a heavier weight in the global economy. Research has since explored further the growth of London’s global city functions, focusing first on the role played by corporations. British urbanist Peter Hall characterised London in the 1960s as one of the few ‘world cities’, with growing dominance over trade, information handling and innovation – despite the unravelling of the British Empire and government attempts to rebalance the economy away from the capital. London was characterised as a global city even as it was going through a period of economic and population decline after World War II. London’s population has long reflected the city’s international character, and was augmented by waves of political and economic refugees – by 1901 around five per cent of the population was born overseas.
London’s influence today draws on the city’s longstanding status as a centre of international power, first as a trading centre then as an imperial capital. This chapter reviews the characteristics and components of London’s global reach – enabling the city to draw in companies, and migrants rich and poor – and how these global functions impact on London. Research on the phenomenon of ‘global cities’ has consistently placed London in their front rank. London’s pre-eminence in the world economy is matched only by a handful of cities.
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