Brexit and London—a Change of Course or Only Acceleration?

London. Once the most influential city in the world. The capital of the British empire that ruled the seas but, more importantly, also ruled the financial world. Beginning in the eighteenth century, London experienced a period of rapid growth, reflecting an increasing national population, the early stirrings of the Industrial Revolution, and London’s role at the center of the evolving British Empire.

During the nineteenth century, London became the world’s largest city and capital of the British Empire. Its population expanded from one million in 1800 to 6.7 million a century later. During this period, London became a global political and financial capital. It was unquestionably the most dominant city in the world for almost a century before New York and Paris competed for dominance.
London entered the twentieth century at the height of its influence as the capital of one of the largest empires in history and maintained this stature in a world that experienced incredible geopolitical changes.

Today, London is a hub of finance, culture, transportation, tourism, and fashion. According to a Forbes ranking, London is still the most influential city in the world, clinching the first spot ahead of New York, but the British Empire is not an empire anymore, and Britain is a second-rate power. The city’s influence is much greater than that of its home country, as London is arguably the financial capital of the world.
But Great Britain was already deteriorating before Brexit, and now the process might accelerate. The question is whether Brexit changed Britain’s course or it was bound to happen anyway?

Most influential cities

A major influential city in the world is generally considered to have an important role in the global economic system. Characteristics that define top cities include being the headquarters of multinational corporations and financial institutions, dominating trade and the economy of a large surrounding area, having important manufacturing centers with port and container facilities, exercising political and decision-making power, and featuring centers with cultural influence, such as media and educational institutions.
London meets these standards: It has the most start-up Internet firms in Europe and is host to 68 of the world’s top 2,000 companies; top universities are within reach of the city center; Heathrow is one of the biggest airports worldwide; and the city still has economic and cultural significance.

Brexit threatens London’s standing, however, as major financial institutions declared they might relocate their European headquarters. Tens of thousands of jobs in the financial sector in London are at risk, and so is its position as the financial center of Europe (perhaps the world).
The future of London has definitely become darker and more uncertain since the Brexit vote. It’s no wonder that most Londoners voted to stay in the European Union, as they have a lot to lose and nothing to gain by this move.
Would London remain influential if Brexit had not happened? I invite you to take a hypothetical journey in time.

Future of post-Brexit London

London became the world’s most populous city in 1825 and continued to be until 1925 when New York became number one. Not surprising, these two are still the top two cities, having laid the basis for globalization as we know it today as well as making the legal and institutional systems of their hosting countries a model, and learning their language a goal for many foreigners. Today, London and New York are only 23rd and 24th among the world most populous cities, and while the New York metropolitan area is 5th in the world by population, London is only 32nd.

Global domination is correlated with population. Countries and cities in Asia have gained momentum in the last few decades not only because they have made some admirable economic advancements, but also because they are highly populated, and thus economic equilibrium is moving in their direction. A Londoner can produce twice as much as a Beijing resident, but if Beijing’s population increases two or three times, it could eventually become a more influential city.

According to the UN, the urban population in 2050 would equal the world population in 2002. That would dramatically change the balance between global cities. Another 2.4 billion people are expected to live in cities by 2050. According to McKenzie, the top six hundred cities in the world will account for two billion people by then, with the greatest increases being in East Asian, African, and South American cities.
According to Global Cities Institute, London will rank only 37th in population in the world in 2025 and then drop to 52nd in 2050, 64th in 2075, and 67th in 2100. London’s population will be approximately one-tenth of that of the most populated city in the world by 2100 according to this projection, which would be Lagos, Nigeria.

Projections often fail, but the world is undoubtedly changing, particularly with respect to economic changes that increase the importance of cities such as Beijing, Shanghai, Singapore, Dubai, Delhi, and others. They are still not considered to be the same type of cultural and historical hub as London and New York, but historical and cultural changes usually follow economic ones, as companies move to where the money is, top universities open branches in such cities, and culture starts to flourish.
London’s GDP is still among the top 10 cities in the world by GDP, but how long will it be greater than that of Beijing or Sao Paolo, given the fact that their population is much higher?

And then there is Britain

As I see it, London represents an experiment of creating a city that is more important than the country in which it is located. Britain can hardly be called an empire any more. Although it has atomic weapons, a strong economy, and is a permanent member of the UN security council, its importance is mostly being a close ally of the U.S., the world’s biggest power. Britain’s economy is 5th in the world by nominal GDP, trailing only the U.S, China, Japan, and Germany, but it will soon be passed by India, Brazil, and others.
In general, the developed world has been losing economic ground in the last few decades, and countries that used to be empires are now only second-rate powers.

 

One certainly has to give credit to London for holding its top spot while Britain’s influence among nations is diminishing, but in the future the British economy will not be strong enough globally for London to be considered the world’s most influential city.
This process could occur a little more quickly due to Brexit, but it would have happened anyway, as Britain and London are too small to have the same dominance in the world as they used to have.

Should it really matter to Londoners? Probably not. Some of London’s residents are among the world’s richest, and that would not change anytime soon.

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