GaWC Research Bulletin 218

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This Research Bulletin has been published in S. Barber (ed) (2007) The Geo-Politics of the City London: Forumpress, pp. 19-38.

Please refer to the published version when quoting the paper.


City of London – Global Village: Understanding the Square Mile in a Post-Industrial World Economy

K. Pain*


The Global Economy: Issues for London

Europe 's competitiveness in the global economy and the contribution of its major capitals to this, have been a key policy pre-occupation since the launch of the Lisbon Strategy in the year 2000.1 As globalisation gathers pace, the rise of the Chinese and Indian economies and their ‘mega-cities' is widely seen as a major threat to the future growth and prosperity of the European region. Economic globalisation and world political instability appear to threaten the established geo-political alliances and trading relationships that have so far underpinned the geometry of capital accumulation in the post-industrial service economy. This has largely benefited Western countries but China and India are catching up fast. Their major investments in research and development for high technology manufacturing production are paving the way for a shift from low-revenue commoditised services to high value-added knowledge-based ‘new economy' functions based in mushrooming high-rise urban infrastructures as seen in Shanghai and Mumbai. As the limits of crude oil production approach, enormous revenues in the Middle East and volatile political relations with the West, are also expected to reinstate historic ‘ Silk Route ' trading relations2 for Chinese manufactured products. In the context of these macro-economic changes, the challenges of demographic change and European enlargement, the sustainability of London's global role as a leading finance and business centre, is a key concern for the UK and the re-launched 2005 EU Lisbon growth agenda.3

The Place of 'the City' in a Network Economy

Academic commentators have theorised the changing spatial relations associated with globalisation from a variety of economic, sociology, geography and political economy standpoints. Shifting patterns of uneven world economic development - over time conceptualised variously as ‘North-South', ‘First-Third', ‘core-periphery' ‘urban-rural' and so on - are now seen to reflect digital infrastructures. Increasing poverty and mortality in Sub-Saharan Africa and contrasting living conditions in the world's richest cities including London, illustrate the complex layering of evolving contemporary global-local spatial divisions. The significance of trans-urban networks – constituted by supra-national business and political organisations, alliances and non-formal social networks – is recognised as transforming spatial relationships and challenging established geo-political explanatory dualisms.4

In the high value-added ‘advanced' service economy (the key priority and focus of the Lisbon growth agenda), virtualisation of information and knowledge exchange has both facilitated and promoted the development of cross-border financial, business and professional networks that are increasingly interlinking cities across political and jurisdictional boundaries. The simultaneous geographical dispersal and concentration of activity in network organisations - first identified by Sassen5 as a feature of the advanced service economy – leads to the agglomeration of key knowledge-intensive production functions in dense and highly clustered areas of ‘global cities', such as the so-called ‘Square Mile' in the City of London6. But networks of city-based offices in financial services and the business and professional service suppliers that interact with them – known as advanced producer services (APS) – are also sites for mobile, high-skilled employment and the infrastructure for inter-city knowledge, labour and capital flows. Given the inherent volatility of business networks in response to market change, concerns about how the City will be affected by progressive globalisation, economic liberalisation and macro-economic shifts, are sharpened. But to what extent is the City under threat from the gathering new wave of integration and the transition of Asian ‘mega-cities' from manufacturing to ‘global city' functions? Four major studies conducted between 2000 and 2006,7 provide key insights into its role in the expanding global knowledge-based service economy.

Studying London as a Networked City

The starting point for the studies was much publicised speculation about London's position in Europe with the 1999 launch of the Single Currency. London's dramatic rise as a global service centre from mid C20th economic and population decline following the ‘Big Bang'8 of the late nineteen sixties, has been widely attributed to a UK regulatory and legislative framework that tilted the ‘playing field' to London's advantage relative to New York, Tokyo and continental Europe. With the UK outside the Eurozone and the European Central Bank (ECB) decision to locate in Germany's leading financial centre, Frankfurt, would London lose out? Some commentators see London's position relative to Frankfurt as counterintuitive. Whereas global cities New York and Tokyo are located in the strongest national economies of the N orth America and Pacific Asia world regions, Europe's leading global city failed to develop in its largest Member State economy, Germany.9

Underpinning the debates, London-Frankfurt relationships were represented in the international financial press as a bitter contest between rivals; even within the UK, the drive for increased economic competitiveness has underscored a competition between city administrations for inward investment and power. While the European spatial strategy10 strongly encourages territorial cooperation, its promotion of regionally balanced or ‘polycentric' urban development, supported by Structural Funds, amounts to a redistributive policy in which the London agglomeration is cast as a less sustainable, ‘monocentric' form of urban spatial development.

The four studies have directly addressed these policy issues, examining London's business relations at different spatial scales: First, London's connectivity to city-based APS networks world-wide, conferred by their geographical distribution of offices and business functions; second, changing APS business relations between London and Frankfurt following the introduction of the euro; third, APS business services clustering in the City of London; and fourth, APS business linkages between London, it's surrounding region and seven European major city-regions.

In contrast to conventional urban analyses using data drawn from standard statistical areas, the studies have investigated London's inter-city, cross-border business relations through the interactions, flows and practices in knowledge-intensive APS industries: banking and financial services, insurance, accountancy, law, advertising, management and IT consulting (advanced logistics and design services were included in the large-scale North West Europe study). As discussed, APS networks have emerged as critical conduits in globalisation, however the functional linkages and flows between cities that they give rise to, can only be studied by gathering primary data. A variety of sources and analytical methods was used - business websites, postal, telephone and web-based questionnaires, face-to-face interviews, focus group meetings and documentary analysis - the cooperation of very senior decision-makers in the major global service networks was thus essential. More than 600 face-to-face interviews with major firms, industry and government organisations have been conducted since the year 2000. The results are reported in detail in a series of research publications.11 Here the key findings from across the studies are considered at macro- and micro-spatial scales with specific reference to the question, what makes London successful?

Macro-Spatial Processes affecting London

Processes of globalisation are leading to a series of local-global operational tensions for APS firms doing business in increasingly competitive domestic and world markets. Within Europe, the size of the European trading block, and the volume of business within this, means it is necessary for firms to support a large ‘primary' or origination side but production functions can be kept in one centre and supply a large geographic area. On a global scale, market expansion has led to a massive growth of non-domestic and affiliated offices for APS firms world-wide, requiring a huge geographical spread of resources also for high-skill, high-revenue functions. This is illustrated by the increasing number of Pacific Asia offices now listed by American investment banks, for example, JP Morgan investment bank has 24 offices in 14 Asia Pacific countries, employing in the region of 7,000 people. They're Asia Pacific ‘footprint' extends from northern China and Japan as far south as Melbourne. At least six related cross-dependent global mega-trends affecting APS agglomeration in London can be identified.

The first major strategic trend is the increasing concentration of resources in as few centres as possible on the production side, in order to reduce costs and deploy scarce specialist skills effectively. Firms need to reduce duplication and cost to remain competitive in globalising markets and this is leading to a concentration of specialist skills in as few centres as possible. This is a key issue for continental European firms who must maintain two major locations in just one region as a German banker explains,

You have a concentration on New York, somewhere in the far East … and you're certainly here in London traditionally and one or two satellites on the continent and you don't want to have more places than that because you can certainly supply this time zone quite easily out of one centre and already two places in Northern Europe is quite a lot. (German Bank A)

A second huge trend, the increasing exploitation of technology , is to an extent, a counter-trend in some business areas, for example in foreign exchange where electronic broking is taking over. But the biggest impacts of technology relate to high-volume, low-revenue retail functions. Even here,

Some of the paradoxes work against each other. On the one hand you could say for the activity which is most dematerialised and standard, you could have the greatest propensity for relocation. Then you say, where to? … For an investment bank it looks more appealing than it would actually be in practice. (Swiss Bank B)

Production functions generally remain strongly people-driven and people-intensive. Personal contact and relationships are still essential, reinforcing agglomeration.

Increasing global dispersal is associated with a third major trend towards industry consolidation to reduce costs and support expensive investment in infrastructure and developing technology. Deeper global, often in combination with local, market penetration requires centralised risk management as people and resources are spread across more offices and cities. Even close to London,

The technology hasn't got to the point where we feel comfortable from an operational risks point of view about locating people who are assembling trades away from the people who've actually done the trades. (German Bank C)

The benefits of proximity shouldn't be underestimated. One example is, we started a project in Ireland, it was a technology project and it failed and shut down and I would definitely say one of the reasons was it didn't have enough proximity to the front office business. (German Bank D)

At the same time, a fourth mega-trend of increasing specialisation , required to remain competitive in local and global markets, is leading to increasing business alliances and the break-up of larger firms into smaller entities. In advertising for example, creative and strategic agencies have split and sold media departments which have then come together in new companies, “that's the sort of typical amoeba-like way in which agencies are dividing and then coming together again in a different format” (Inst. Advertising).

A fifth related trend is the increased complexity associated with the cross-cutting business relationships between firms and the interdisciplinary services they provide. As an Swiss investment bank in London's Square Mile explains, “a lot of the complexity at the moment is reinforcing some of the very basic things that people have taken for granted.” (Swiss Bank E).

A key feature of the APS industries is that firms provide services to each other. Their multiple cross-cutting relationships as service providers and suppliers creates a proliferation of dynamic business interdependencies that requires proximity and is a further agglomeration driver.

Intra- and inter - firm relationships and working between cities, involving transfers of knowledge, business, skills, revenue and labour and corporate ownership of financial markets, thus have crucial geo-political importance. Contradicting predictions of the ‘death of distance' and ‘geography' with increasingly ‘wired' communications,12 the centralisation of key APS global functions in London is shown to be a crucial component of globalisation. While the use of virtual communications is shown to be intensive in all sectors, these are mainly used for digitised, commoditised and low-value exchanges, as already discussed, and for intra-firm (as opposed to external) communications within and between offices in the same network. Increasing complexity for management and high value-added production functions - for example, mergers and acquisitions and investment banking – is actually increasing the need for proximity and agglomeration.

Agglomeration and London Global Connectivity

These trends, driven by global strategy, explain the mutually reinforcing tendencies between global dispersal and centralisation and continuing agglomeration in London. But a sixth mega-trend is seen by firms as even more important in explaining London's role as a premier location for global business. Before turning to consider this, London's global position as an APS cluster two years after the introduction of the Single Currency, is briefly considered.

2001 data on the organisation of 100 major APS firms across 315 cities world-wide,13 showed London to be the most highly connected financial and business services cluster in the world, followed by New York, on the basis of the global service functions located there. Comparing London's global network connectivity with other European cities, London (ranked 1) was followed by Paris (6) and Frankfurt (7) for financial services connectivity, while Paris (4) proved much more strongly connected than Frankfurt (14) as an all-round business services cluster.14

Questionnaire and interview evidence from subsequent studies indicates that London's position as a global service centre has not diminished in spite of the UK remaining outside the Eurozone with 25 countries turning to the ECB in Frankfurt since 2004. London is unanimously still considered the unique European production centre and platform, or interface, for international flows and interactions in global service networks. But agglomeration is a fluid, not a fixed state.

New economy clustering is constituted by flows and transfers of information, ideas and people, rather than material concentrations in any fixed physical or territorial sense. The high-value international communications and transactions articulated in London, circulate through inter-city corporate networks. All parties meetings conducted in London may, for example, be interactions between New York and Hong Kong or Amsterdam and Dublin. The collective specialist skills and intelligence of global experts in any one field are present in the City. Similarly, technology allows banks headquartered in Europe, including German banks, to access European and global markets from their offices in London, bypassing Frankfurt, because London is seen as the more efficient place to conduct international transactions.

Growth and contraction are a sign of a healthy cluster but, in the context of macro-economic instability, it is vitally important to understand London's specific strengths. These evidently do not relate to the relative size of the German and UK economies, equally the euro is regarded as making no difference. It seen as ‘just another currency' with London benefiting from the new euromarkets. Global connectivity is clearly more than a matter of national economic strength or a currency.

But attempts to model new economy service agglomeration are found to be unable to take satisfactory account of the dynamic cross-border and supra-city relationships, and the human social and cultural processes, that influence network flows and localised clustering.15 Office locations tend to be relatively fixed over time and relocation is generally within centralised and local cluster extensions, but flows of key APS production assets - labour and business intelligence - are much more difficult to elicit. As the senior manager of one German headquartered bank who operates a virtual office in London and Frankfurt explained,

All those 100% are operating together as one team – they're a European team with one head, there are no two heads any more … How big is our office in Frankfurt and London? I don't know. It's as big as that today and its smaller or larger … we increasingly get to the point where we say it doesn't matter. (German Bank F)

This increasing fluidity - a product of the need for firms to be agile - is reflected in present requirements for flexible office space as well as flexible and mobile labour.

This leads to the sixth mega-trend, regarded as most important by interviewees in explaining London's success as a global APS cluster - infrastructure . In part this relates to the increasing dependence on high density technology but, the key concern is people – where talent can be found, “Where do I get the people from? Where do they sit and where are they available?” (German Bank G). Most importantly, London's transnational talent pool is regarded as unique. For an American investment bank in EC2, “what we're interested in is the infrastructure of where we are but the primary driver is workforce” (US Bank H). Traditionally flexible UK employment legislation has allowed contracts to be structured appropriately according to business so that firms are willing to take risks in expanding in London. This is an incentive to locate business in London but it is not a complete explanation. More importantly, talent and business intelligence – the inputs and products of APS - are mobile, and they are currently found in London. UK personal taxation regimes are an important incentive for some to work in London but the interview results indicate that other ‘soft' micro-processes are also crucial.

Micro-Processes: Interaction in the New Space-Economy

At a micro-scale of the new service economy, it is clear that transaction costs - office space and transport - are ‘fuzzy' locational determinants in APS production.

Very, very few foreign players actually make money in London. The vast majority of them are losing money, so why are they here? … I'm not talking about people like Deutsche and Chase and ABN Amro but the vast swathe of small banks. (Inst. Banking)

And, for firms engaged in wholesale production activity, the need for a central London location is not simply a matter of needing a prestigious City address for market credibility in building a global brand, important though this is. Integration into localised transnational labour markets and social and cultural networks is regarded essential for knowledge production, transfer and innovation in international business, and this requires a substantive human presence. For global functions, the simple ‘need to be there' for relationships, trust and a ‘sense of team', is impossible to quantify or model mathematically satisfactorily. Here, the restricted area of the City of London and its Square Mile play a crucial role in generating global agglomeration economies for the new space economy. Supranational tacit knowledge exchange is made possible through the Square Mile's ‘global village' social networks.

The advantages of close proximity for face-to-face contact are well-established but the studies show that these apply especially to APS wholesale functions, which have a different locational logic from that of other ‘hi-tech' and retail business services that have a more dispersed cluster geography. Banking and a wide range of specialist auxiliary financial services are identified as a key anchor in London cross-sector business clustering. The need to be close also applies to segments within one entity. For one American bank,

‘Connecting the dots … all those people who can provide the very best advice and the very best service, that requires them to talk to each other, to see each other and that means equity fixing, investment banking, private wealth management, commodities, foreign exchange, private equity, all need to know what they're doing somewhere or at least co-ordinate the services they're providing to the same client or to related clients. That means we've strongly resisted the decentralisation of our businesses … we need to have everybody together.' (US Bank I)

The insurance cluster appears relatively self-contained physically, “you've only got to go two or three blocks away and you won't find any insurance businesses at all” (UK Insurance J). However, the increasing need to spread risk across institutions, also requires proximity between the financial and insurance sectors. Both sectors have multiple cross-dependencies with specialised ‘City' law and accountancy firms, clustered close by and to the west of the Square Mile.

‘All businesses need banks [and] so many ancillary businesses feed off insurance – law, accountancy particularly in this place because of our accounting systems, loss adjusters, surveyors, all sorts of support services like software houses specialising in insurance. There's a lot of people round here who aren't actually in the business of underwriting or broking but who nonetheless feed off it and equally suppliers are close.' ( UK Insurance K )

Increasing transaction size, for example in mergers and acquisitions, requires proximity for frequent, and often protracted, face-to-face interaction between multiple sectors and multiple actors within these, including corporate, government and institutional clients, “round table meetings that go on non-stop, day and night for days on end” (UK Law L). Because client teams need representation by the top global specialists in any given market, not just one, several top law firms may be involved in the same transaction.

Very close proximity between global service suppliers enables relationships of reciprocity to be established between senior managers and specialists which is crucial for high-value knowledge transfer and innovation. While the costs of supporting a City location are high, these can be offset by network capacities for virtual working. For foreign firms, t he City is also a back office. For example, in a Swiss investment bank in EC2, “we run systems here for use in other locations” (Swiss Bank M). A Dutch investment bank's London office is providing economies of scale by providing,

hub back office activities, particularly things like settlement. And London is one of those hubs for our global network so, from an IT and a settlement perspective, and for some of the front office equities for example, we're hubbing a lot of the processing power and sort of back office activity in London and servicing, particularly Europe, but, in some cases, Asia and the United States. (Swiss Bank N)

Similarly, a French bank undertakes back office activities overnight for an Asian subsidiary. These activities are fluid and move invisibly between cities and countries in networks.

We could clearly be doing those either in Paris, where its cheaper anyway, or in various other locations. But, increasingly upstairs, we're doing certain back office activities for our Far Eastern offices, which is the opposite way round to what you'd expect. But that's because we've got the systems and the space is free at night … I'm sure people are more expensive here but here we are doing Tokyo and Singapore in London. (French Bank O)

Paradoxically, for the insurance sector, a single tightly clustered City location is necessary for the global functioning of virtual insurance markets. Accounting and consulting are the least centralised, and also the most regionalised non-retail, APS sectors. Both law and accountancy straddle between the Square Mile and central London, to the law courts and the West End, where high-value private, corporate and institutional clients are located. Canary Wharf to the east, has become established as a non-contiguous City cluster extension for banks and financial services, “in effect, a single business cluster” (US Bank P), providing office space that has been deficient in the Square Mile,

The problem with the City is, its got some great buildings, but floor-plates are a problem and always will be … you have a multiplicity of landlords who don't have the focus these guys have. (French Bank Q)

But the benefits of a Square Mile location remain an overriding locational determinant for many banks and financial services firms. Firms that have moved to Canary Wharf have pressed for better accessibility to the west for interface with the City, the West End and Heathrow airport; some have retained the use of offices in the City for meetings there. A senior manager of a German bank located in EC2 regards the distance between the City and Canary Wharf as a barrier, “I haven't been for a meeting in Canary Wharf for ages. It may be that meetings are just not taking place in consequence.” (German Bank R).

A sense of ‘place' remains important for production in globalising services because of their essential nature as ‘people' and ‘relationships' businesses. And the need for close proximity goes beyond practical reasons, such as the need for firms to build relationships of trust or conduct complex negotiations. The ‘atmosphere' of the City, the proximity of its financial and creative milieu and of central London's lifestyle offerings, are much discussed as material assets. For example in advertising,

That is why London is the centre of UK advertising, because it has got the most intense aggregation of people, businesses and stimuli around it and it feeds off itself and it gets better and better. (Inst. Financial Services)

Being in the right environment matters. A move to Canary Wharf was seen as “disastrous” for one major advertising firm because this is considered, “a banking environment …not the ideal environment for an advertising agency” (US Advertising S); “the reason its struggling is that they can't get people to work there … clients don't want to go down there” (Inst. Advertising).

The contrast with Frankfurt is notable. In terms of its size and development, it fails to offer the scope of employment opportunities and cosmopolitan environment needed to attract the young, talented and ambitious people from around the world who are essential inputs to London's synergistic, multi-sector APS clustering.

If you have a young Italian sitting in Milan and his boss calls three of them in and says to two of them, you're going to London, and one of them is going to Frankfurt, the one whose going to Frankfurt … he may get paid the same but he'll say what have I done wrong? (Inst. Financial Services)

A recurrent complaint in interviews undertaken in Frankfurt is the difficulty of getting good people to work there; even within Germany, other cities are preferred. Work-lifestyle choices are shown to have contradictory spatio-economic outcomes in these two cities that reflects their historical development paths. Frankfurt's position as an international financial centre seems held back in comparison to London, by its lack of ‘single city focus' and ‘institutional thickness' within Germany, influencing its attractiveness as a space for consumption and production in APS networks. And the effects extend to the cities' respective regional hinterlands where APS clusters in South East England are found to be functionally inter-linked to central London and to each other, making this a more functionally polycentric region than the Rhine-Main and other major city-regions studied in North West Europe.16

Conclusion: New Directions – Risks and Opportunities

A crucial finding from the recent North West Europe fourth study is that, even in regions that appear polycentric in terms of the size and morphological distribution of their towns and cities, global APS functions are concentrated in just one city in all cases. The phenomenon of centrality at a city-region scale of the European service economy, overturns previous theorisation in spatial policy that aligns objectives for growth with those of morphologically polycentric development. Furthermore, urban polycentricity is not found to promote more balanced or environmentally sustainable development in any of the regions studied.17

Contrary to its representation in the ESDP, far from being a monocentric city, London is shown to be highly functionally connected through APS business flows within the UK, within the European region and globally – a product of, and contributor to, functionally polycentric inter-city relationships.18 The sustainability of London's global connectivity thus has far-reaching economic and employment implications outside the City and beyond the South East. In addition to direct links between clustered central London APS functions and business conducted across the country, benefits within the UK include tax revenues and a raft of invisible earnings from supply chain linkages that are impossible to trace and map accurately.

Whereas the globalisation discourse has typically focused on dualistic territorial power relations, the results from the four studies indicate that a complex geo-political frame is emerging. As globalisation progresses, intensifying market competition at all scales appears to be thickening and extending trans-urban network linkages. Firms increasingly need to work across cities to remain competitive, leading to synergistic inter-city relations. Potentially this presages a shift from low-value, off-shored, commoditised activity to the development of high-skill, high-revenue functions in integration zones such as Eastern Europe and Asia, reflecting their market development as opposed to their low-cost labour. Morgan Stanley, for example, has the first Chinese language site by an international investment bank communicating its best practices in finance, management, operations, infrastructure, communications and capital market development.

But current European and UK spatial policy aimed at promoting central London activities in areas lacking development, fails to appreciate the specific geographical logic of APS industries, for which dispersal and centralisation are ‘two sides of one ball'. A law firm explains the dilemma.

is there any way of moving some of that outside London, no, there isn't. If we were to move anywhere outside the City, or even to Birmingham, those would be lost. We wouldn't be able to create wealth … It isn't just a question of, can we have a little bit more of it please elsewhere? … We wouldn't be able to bring in the business in order to do it. We can only do it because we're in the City. (UK Law T)

Improved understanding of cluster dynamics and the functional specialisation between wholesale and retail, complex and commoditised functions across space, would allow a sharper focus on investments to support inter-city complementarities. According to the City, the Government will ignore the London's needs at the entire country's peril.

We won't be able to afford to put up new infrastructure in Huddersfield or Glasgow if the UK plc doesn't make the money that it needs to London … some advisers still have the wrong misguided 1970s version … businesses at the end of the day are rational entities and they will go where it makes sense for them to go. You can do anything you want and they're like squeezing a bar of soap, they'll pop up where they think the most essential.. (US Bank U)

Key issues – transport and regulation – require multi-layered approaches and investment in London and its city-region, cutting across government departmental and jurisdictional boundaries. The strongest warnings come from the major foreign investment banks that are critical to London clustering.

London's becoming a third world country in terms of transportation … public transportation can't cope. It's increasingly problematic … it's almost easier to have cross-industry meetings in another city. (US Bank V)

We talk about a gradual erosion of London's attractiveness as a place in which to do business ... whether it's about tax, or transport, the cost of people, the cost of living, European legislation, employment and social, is a nightmare – it worries us and it's part of the chipping away … you start asking the question – well is this really the best place to be? (US Bank W)

Do we get to the point where we're so regulated, or its so difficult for us to actually make money that we're doing all this regulatory stuff [and] we're not making any money, that it could tip over the brink and somewhere else picks up the call? (Swiss Bank X)

The Chief Operating Officer is American, the Chairman and senior executives. They love London, they all like living here but they don't have a natural loyalty … and the way we're seeing it is we're not bringing a single new job to London and, where we can move jobs out, we are, and that's the reality … in ten years time London is going to grind to a halt … key functions are always going to be here but if the all the non-essential people go, even if we're left with 2,000 here, that's still a big impact on London. (US Bank Y)

The overriding message arising for policy is the need to maintain London's historic openness to flows that has made the City the ‘Wimbledon' for top international players.19 And this will be all the more important as demographic change increasingly constrains the supply of young talented labour for service providers and places greater burdens on public sector expenditure. For a London based consultancy the skills shortage already constitutes a serious problem,

Our constraint is getting people of the right calibre to do it … there's a limit to how much longer you can go on, so you've got to diversify, you know overseas where there are more people … the Indias and the Chinas and you've got to go into non-people in terms of businesses, intellectual property and asset driven businesses. (US Consulting Z)

Returning to overarching questions - To what extent is the City under threat from the Asianisation of the global economy? Will emergent economic circuits bypass Europe and London ? The answers would seem to depend, to a large extent, on appropriate UK and European governance. There are big opportunities for both East and West. While Asia has large capital savings, it lacks relevant expertise and experience that the City can offer; at the same time, Europe constitutes an expanding market for China. But policy needs to provide a stable local environment and infrastructure for globally-traded service sectors.



*Kathy Pain, The Young Foundation, Email:

1. European Council (2000) Presidency Conclusions – Lisbon European Council, 23 and 24 March.

2. The so-called ‘ Silk Route ' was an interconnected series of trading routes between the Far and Middle East, across Southern Asia.

3. Commission of the European Communities (CEC) (2005b) Common Actions for Growth and Employment: The Community Lisbon Programme . Communication from the Commission to the Council and the European Parliament, SEC 2005 981, July 2005 COM 2005 330

4. Pain, K. (2007) Core-Periphery Relationships in a Global City-Region: The Case of London and South East England, in Hoyler, M., Kloosterman, R. and Sokol, M. (Eds.) Globalisation, City-regions and Polycentricity in North West Europe, Regional Studies (forthcoming).

5. Sassen, S. (1991, 2001) The Global City. Princeton: Princeton University Press; Sassen (1994, 2000) Cities in a World Economy. London: Pine Forge Press. See also, Castells, M. (1996, 2000) The Information Age: Economy, Society and Culture. Vol. I: The Rise of the Network Society. Oxford: Blackwell.

6. The ‘City of London' is London's ‘central business and financial district,' is also referred to as ‘the City' or ‘the Square Mile', as it is approximately one square mile (2.6 km²) in area.

7. Economic and Social Research Council: World City Network Formation in a Space of Flows (Taylor et al., 2001); Anglo-German Foundation: Comparing London and Frankfurt as World Cities: a relational study of contemporary urban change (Beaverstock et al., 2001); Corporation of London: The City of London and Research into Business Clusters (Taylor et al., 2003) ; INTERREG IIIB North-West Europe: POLYNET: Sustainable Management of European Polycentric Mega-City Regions (Hall and Pain, 2006).

8. ‘The Big Bang' refers to the sudden UK government deregulation of the City's financial markets in 1986.

9. See Beaverstock, J.V., Hoyler, M., Pain, K., Taylor, P.J. (2003) ‘London and Frankfurt: Competition or Synergy? In: Shearlock, P. (ed) International Investor , March 2003, 225-229. London: Sovereign Publications.

10. European Commission (EC) (1999) ESDP: European Spatial Development Perspective: Towards Balanced and Sustainable Development of the Territory of the European Union . Brussels: European Commission , supported by the European Union ‘INTERREG' and ‘ESPON' programmes.

11. Taylor, P. J., Catalano, G. and Walker, D. R. F. (2002) ‘Measurement of the world city network'. Urban Studies, vol 39, pp2367–2376; Beaverstock, J. V., Hoyler, M., Pain, K. and Taylor, P. J. (2001) Comparing London and Frankfurt as World Cities: A Relational Study of Contemporary Urban Change . London: Anglo-German Foundation; Taylor, P., Beaverstock, J., Cook, G., Pandit, N., Pain, K. and Greenwood, H. (2003) Financial Services Clustering and its Significance for London . London: Corporation of London; Hall, P. and Pain, K. (2006) (eds) The Polycentric Metropolis: Learning from Mega-City Regions in Europe. London: Earthscan.

12. For example Cairncross, F. (1997) The death of distance: How the communications revolution Will change our lives, London: Orion Business Books.

13. Taylor, P. J., Catalano, G. and Walker, D. R. F. (2002) ‘Measurement of the world city network'. Urban Studies, vol 39, pp2367–2376.

14. Taylor, P. J. (2003) European cities in the world network, in Dijk, H. van (ed.) The European metropolis 1920–2000, Rotterdam: Erasmus Universiteit.

15. Discussed in Pain, K. (2007) Core-Periphery Relationships in a Global City-Region: The Case of London and South East England, in Hoyler, M., Kloosterman, R. and Sokol, M. (Eds.) Globalisation, City-regions and Polycentricity in North West Europe, Regional Studies (forthcoming).

16. Pain, K. (2006) Policy Challenges of Functional Polycentricity in a Global Mega-City Region: South East England, Built Environment 32, 2, 194-205.

17. Pain, K., Hall, P., Potts, G. and Walker, D. (2006) South East England: Global Constellation' in Hall, P. and Pain, K. (2006) (eds) The Polycentric Metropolis: Learning from mega-city regions in Europe, London: James & James Ltd / Earthscan, pp.125-136.

18. Taylor, P., Evans, D. and Pain, K. (2007) ‘Application of the Inter-Locking Network Model to Mega City-Regions: Measuring Polycentricity within and beyond City-regions' Regional Studies (forthcoming).

19. The ‘Wimbledonisation' of the City refers to its role as a playing field for the world's top foreign players.


Edited and posted on the web on 30th November 2006

Note: This Research Bulletin has been published in S. Barber (ed) (2007) The Geo-Politics of the City London: Forumpress, pp. 19-38