London’s international reputation has suffered another blow. Images of fire and looting across the capital, beamed around the world, raise questions about the government’s ability to keep the city safe. Combined with the aftermath of the financial crisis, it’s another factor that could make London less attractive for mobile workers and investors.
The UK capital has a peculiar safe haven status – for those who have a choice. Peculiar, because there are many factors that count against it. Heathrow may not be as bad as it was, but it still causes frustration for international travellers. Londoners generally have to allow an hour to get from A to B in the city. Property prices are sky high. Personal taxation has also become less competitive.
In spite of this, London has remained desirable as a place to live, work and invest. Super-prime residential property in the city has become a financial asset in its own right – a relatively safe store of value for the wealthy of the Middle East, Russia and Asia.
Widespread disorder in the UK may prompt calls for the government to soften its austerity programme. But that would be the wrong policy response. The reality is that the UK simply has no choice but to stay the course – it can’t afford to do anything that might threaten its triple-A credit rating and its ability to borrow cheaply in the markets. But after restoring order, one priority should be repairing the image of London internationally.
Of course, no one needs to organise a charity collection for the international elite, whose life prospects are at the polar opposite end of the spectrum to those of the rioters. Indeed, their visible wealth and prosperity is a provocation to a youth that feels excluded from even remotely similar opportunities. That is a challenge for longer-term social and economic policy.
But London would regret it if talented individuals are deterred from moving to the city. There will be those who are this week weighing up job offers based in London and other financial centres. The scenes on the television may be the marginal deciding factor in their choice. Boris Johnson, London’s mayor, is at last returning from holiday. He has a city to defend.