On Monday there were power failures and considerable service disruption on the Victoria line. Worried about getting back to the Commons in time, I got out at Oxford Circus. It was 6.30pm. The pavements were so crowded I could not walk quickly or even go in the direction I wished to go in. There were thousands of shoppers out and about.
Someone drew up in a taxi at Hamleys, so I grabbed the taxi. The driver told me that business was good – strong positive words in answer to a question I often ask about how busy they are. He explained that most of the people he carries are foreign visitors.
It’s another part of the growing evidence that central London has detached from the rest of the UK economy. Large number of overseas visitors are swelling the retail sales. Large numbers of visitors are making longer term commitments, paying ever higher prices for flats and houses, and renting office space.
Whilst the typical UK High Street languishes, Oxford Street booms. Whilst provincial property markets wallow, with plenty of empty space and falling rents, central London space is filling up quickly and rents are rising. The devalution of the pound has stimulated central London. Financial and political troubles elsewhere in the world are also helping.
July 14, 2011
It is good to know that London is booming.
In Wisbech our streets, too, are full of foreigners, many of them planning on the long term too. In nearby Peterborough, the streets are full too and there are a lot of new shops.
Maybe the inflation is at least doing some good at last.
July 14, 2011
Well yes and no. Lots of tourists at the moment and people with money from overseas buying houses and shopping with money from overseas but the road are empty, compared to the usual, despite all the silly islands, anti car lights, bike and bus lanes. I drove from Canary wharf to Highgate and have never done it so quickly. I suspect many can not afford petrol or cars any more.
Many are not working or on part time and even those who are working are being squeezed by inflation, little pay rises and absurd tax levels. Also increasing bank margins and lack of lending too.
The private sector needs policies to help it, banks that lend, lower taxes and a smaller state.
It seems now that the BBC has killed Murdoch with their orchestrated campaign that big state over tax, over regulate and rule from the EU “BBC think” will prevail for ever more over this sorry island?
July 14, 2011
It wasn’t just the BBC – it was backbenchers because of the expenses scandal, other papers because of their dwindling market, and above all 38 Degrees. Is Lord Leveson going to investigate Tom Baldwin and his links with that organisation? The PM spoke of a firestorm, and Jacob Rees Mogg of standing on the burning deck. Who lit the fire? And why? The ex PM thought it a good day to reappear in the House of Commons and reclaim his rightful position. He wasn’t that deluded. This was a serious hostile takeover bid, by the discredited Left. Of course the BBC were only to happy to mix business with pleasure.
July 14, 2011
The BBC coverage was and still is wall to wall when they should be covering the disaster of the EU and the PIGIS caused by the insane EU plan for domination. No one at any of the newspapers or the police could surely be surprised by any of this newspaper nonsense. It is just a matter for the criminal law to take action when people are caught.
July 14, 2011
Yes, Lifelogic, I agree with you of course. The BBC are hell. But look how many people acted as their useful idiots.
July 15, 2011
You couldn’t really make it up could you? First the British Brainwashing Corporation kills off the competition, and then they go on strike. As for their 100,000 useful idiots, I can’t help noticing that 38 Degrees say they have 800,000 in their army. So what are the remaining 700,000 thinking, the ones who didn’t click their mice at the command?
July 14, 2011
Did anyone notice by the way how empty the Chamber was when Kate Hoey presented her EU petition? And has anyone seen a report of this? You would never think the opinion polls have reached 50% now in favour of leaving outright. Funny how the public has been able to think this one out all by itself.
July 14, 2011
I get the cab every day from Waterloo to Victoria – and 90% of the cabbies tell me business is really down. They blame work at home Fridays, video conferencing, business moving to China, the demise of Gentlemens clubs, less corporate expenses and Boris bikes.
I think I read 60% of property transaction in central London were Chinese, Arabs and Eastern Europeans looking for a legally soft bolt hole in a crisis. Certainly in Belgravia there is a huge amount of scaffolding and builders I see on my lunch time walk – past PM Thatchers house. I asked a few builders the nationalities of their employers and most said they didn’t know – in other words rich anonymous foreigners.
There are a lot of Tourists in London because of the weak pound.
So I think that whilst you may have the impression things are rosy it is not true.
July 14, 2011
Free money from the BOE to the London head quartered banks ? And/or, the natural progression of a pyramid banking scheme that eventually sucks the life out of the rest of the economy….
July 14, 2011
We recently had some relations from Switzerland stay with us in London. They spent almost the entire holiday shopping. The young man admitted at the end that he had ‘suffered’. The prices of items of clothing and shoes are often less than half here. Away from London in my city they found even better value from their point of view. It should be remembered that in Switzerland, a primary school teacher can earn over £100k.
For them it is like a trip to New York used to be for us. Now we find prices about the same in the US. Even in Euroland we find that prices in Euros for dining out, food and consumer durables have greatly increased over the last 7 years yet their official inflation rate was supposed to be low.
The restuarant that we used to visit served a dinner for 10 euros and last year it was 24E, but the place was almost empty. The local business and property taxes had escalated so they could not reduce the price. This year it has closed after 30 years. Now the same process is happening here.
July 14, 2011
Poor little Switzerland, like poor little Norway, is doomed to failure and economic ruin because it is not in the EU.
July 14, 2011
And don’t forget poor little South Korea.
July 14, 2011
No reason but over government, socialist and Cameron and exit from the EU why our teachers should not earn at similar levels.
July 14, 2011
Just because your taxidriver’s main customer base is foreign visitors doesn’t necessarily mean that the tide of humanity thronging central London are mainly visitors; the Underground must be quite intimidating for foreigners with all the overcrowding and pushing and shoving and the possibility that on alighting at the wrong station they might find themselves apparenty transported to a different continent.
July 14, 2011
London is a city with essentailly an anticompetitive monopoly status, and parts of it should be spun off. Looking at cities through such a metaphoric lens can be quite inforamtive. If London can be seen as anticompetive, what policies can be followed to break this?
Is scale justifed by ability to innovate (i.e. are there static losses in allocatiove efficeincy that are offset by dyanmic efficeincy? Clustering obviously helps reach a critical mass, the question is whether this can be reached elsewhere as well, without significantly damaging the existing cluster.)
Move attractions (all the major museums and galleries) from London to B’ham/Manchester?
Get that that fast line built, stop talking about it. Decide whether it would be better to subsidise fares than museums/galleries if they stay put.
Relocate Government to B’ham/Manchester.
(And as an amusing aside, should London adopt the Euro?)
July 14, 2011
Well spotted. And where do the political/media elite and patronising chattering classes all reside? Dagenham, Slough? They live in their own thriving bubble detached from the lives of the peasants who pay for them.
What is being done to stop the practice of Stamp Duty avoidance which is becoming common in Central London?
Tourism in London is always boosted in July by continental school trips. They take advantage of cheap and plentiful student accommodation, available at this time of year.
The Govt made a very poor decision in continuing Labour’s free admission policy for museums and galleries. With London tourism booming, we could be raising tens if not hundreds of £ms from admission charges. No tourist would ever refuse to come to London on the basis of paying a few £s to enter any of the great museums/galleries. Its a disgrace that important cultural and hisorical regional museums are closing all over the place, unable to attract visitors and funding, whilst pretentious art galleries are being subsidised by the taxpayer. I say this as a Londoner.
July 14, 2011
I always notice when I go to London that it is a different country. Gone is the squalor of the seventies. The traffic has been tamed too. It is young, energetic, and hopeful. The best thing of all is seeing how much slimmer and fitter Londoners are – because they don’t drive everywhere.
July 14, 2011
If only someone could figure out how to make this effect occur in other major cities, such as Birmingham, Glasgow, Liverpool, or Manchester. Then there might be a recovery outside of London.
July 14, 2011
I presume almost all of those foreign visitors came via one of London’s airports. Perhaps the north of England or Scotland needs a large hub airport since the Tories have decided London’s must not be expanded.
July 14, 2011
Last Saturday afternoon my wife and I took a taxi from Euston Station to Charing Cross and like you we could not believe how jam packed the pavements were with ‘tourists’.
Astonishing!
July 14, 2011
John, I dont know what you think about this but a pictue is emerging that you touched on several times.
I think the problem across a lot of place (outside London, Italy, Greece etc ) is PRODUCTIVITY. When you look at Italy it’s productivity thats the problem. Same with Greece and outside London. All these places have become dependent on Government spending – i.e. non productivity. Even Trichet touched on this in his meeting last week.
I think what we are seeing is the start of a fundemental shift in economics at a Global level – that the productive areas will be successful and the unproductive areas will not. Debt has masked this lack of productivity – and it is important to see that debt is NOT the underlying problem – debt has been used to cover up the underlying problem of Low Western productivity.
This shift will change a lot of things – lower taxes, less public services, complaints from the left, a shift in politics to the right, chnage in social focus to hard work etc.
When you said “Its Europe Stupid” – I would say “Its Productivity Stupid”
July 14, 2011
A parallel point made by Anthony Hilton that monetary union will lead to lower standards of living in the less competitive areas of the union – unless the rich area bail them out. London is to Cornwall as Germany is to Greece he points out. Further just as you pointed out in your post on Germany this week Mr Hilton also points our that monetary union is fast becoming the political issue of day. Are Germans prepared for a permanent flow of Cash to Southern Europe and are the Greeks prepared for a permanent fall in living standards?
When I see so many commentators seeing the same pattern it won’t be long before it becomes public truth.
The question we are all asking is how long is Germany and Greece going to put up with this situation. Nobody in the City believes it will last. The financial problems were just papered over using cheap debt. We are all watching the political polls now. No threats from the brazen Mr Trichet can possibly save the Euro.
July 14, 2011
How much of the average person outside London’s productivity is appropriated by the City of London ?
July 14, 2011
London seems to be a seperate economy, nay, country. The North/South divide is not so simple. People in many parts of the South and SW are struggling on wages which would afford affluence in the North.
July 14, 2011
Indeed if you want a house for your wife and say tw0 children you need a family income of about £100K minimum just to be able just to rent one, get to work, pay council tax, BBC tax, car and parking charges, cloths and to heat & eat after the absurd current tax rates. (Which is similar after tax to what you get on the dole if you rent a house and have children).
July 14, 2011
Makes you think how large swathes of the population live if that’s the case then?
July 14, 2011
They need to get on their bikes and pedal uphill then.
July 14, 2011
The bulk of the stuff they are buying is imported. The energy they consume etc. is also largely imported. Much of the property sold is “investment” by hot money from dodgy regimes, money from the illegal economy and plain simple money laundering. Yet, on some of all this is VAT. Sadly where the profits end up is not in the UK, it is elsewhere and there are slim pickings from the relevant company taxation. A lot of this is supported by effective subsidy from elsewhere in the UK. All this is some explanation of the divergence between The Great Wen and the rest of the UK.
July 14, 2011
Those people who work in London’s financial and political sectors have become detached from the plight of the rest of us too .
The City of London has systematically sucked the life out of the real economy over the last 40 years .
The Golden Goose of the real economy hasn’t got any more eggs to lay for the City .
What are the spivs going to do when the rest of us no longer have any money to buy their substandard financial services with ?
July 14, 2011
Yes, quite.
When Britain had an empire, the City made money from that. Once it had gone, it could only make money from the rest of the UK.
Unfortunately, the “City people” aren’t actually anywhere near as good as their PR would have us believe (otherwise we wouldn’t be in the mess we are) and are vastly overpaid for their performance.
The UK economy certainly needs to be rebalanced-the question is how? Answers on a postcard please to D. Cameron, 10 Downing Street etc.
July 14, 2011
Force us into an EU union, which will defer payment for a few more years.
July 14, 2011
Sorry John, but your point is what ? Unfortunately London retailers and tourist spots being busy is doing nothing for the rest of the UK.
July 14, 2011
Today I conducted a training session in a top London hotel for 25 of their staff. Not one of these were British. London is certainly booming but it is doing so on the backs of foreign workers whilst the UK underclass sit on their behinds collecting benefits (and voting Labour!)
July 14, 2011
Is life in the Westminster bubble so much of an illusion that Whitehall and Parliament fail to understand the plight of the country? It would seem so. It is The Way We Live Now.
July 14, 2011
Norman – I would think that Bond St alone collects a few shillings in 20% VAT receipts which of-course benefits everyone. I suggest you take a walk down there one day. You may say to yourself -‘thank god for London’!
July 15, 2011
Re: vat refunds on shopping.
http://www.johnlewis.com/jl_assets/pdf/22907_export_and_tax_free_shopping.pdf
Devaluation QE & ZIRP to help banks, tourism+,inflation+,domestic demand-. Its also Summer.
Be interesting to know the breakdown of tourists by country and socio-economic status, but at least good news for some.
July 15, 2011
Walk round Selfridges and you’ll soon see; Arabs and Chinese. Many visitors from nations where our money is being sent in he form of aid. You’ll see them feating on £1,000 handbags.
July 14, 2011
Surely what is happening is that London has has a huge cash injection from QE. Much of the fancy complicated handling of that QE is done in the City. The rest of the UK is hammered by paying for the huge national debt with savers being robbed by the Bank of England’s negative interest rates and devaluation/inflation.
July 15, 2011
Seems to me what you describe is, in microcosm, an example of the London-centric nature of the UK. London has an inherent advantage over everywhere else as it is the capital. Efforts to push out, such as the DVLA moving to Swansea, do nothing to stem the tide flowing in the opposite direction.
The inherent London advantage is made worse by London, in the form of the government, arranging things to suit themselves and by telling the rest of the rest of the country how to behave.
For instance transport. Why not start HS2 at Edinburgh and provide a direct link to the Channel Tunnel? Why no pro-car attitude where rural public transport is never going to be viable.
For instance broadcasting and the internet. New broadcast services start in London and there the choice is greatest. High speed broadband is readily available in London, but maybe, sometime, never the further away you get, where as the greatest benefit is where populations are sparse.
Things are made worse by London telling the rest of the country how to behave. Farming enterprise is constrained by London telling them what they can and can not do, with often new ideas countermanding previous ideas as to what is “best”.
And if you live in a National Park you find that London has written the rules such that the first priority for Park Authorities is to administer the park for the benefit of the NATION and local interests come second. Why not such a dictum for for the capital, which is surely a national resource if ever there was one?
So while it is good to read that Central London is thriving, a new attitude is needed to give the rest of the Country a chance to show that they too can be enterprising and a motive force for prosperity.
July 15, 2011
London is indeed booming. Longhaul flights to Heathrow are completely full. London hotels are full. London shopping areas are packed despite the addition of two huge new shopping malls at Shephers Bush and Stratford. Brighton aka London-on-sea is also booming thanks to tourists enjoying the cheap pound. Residential rents in both cities are increasing rapidly. But will this apparent prosperity spread out across the regions – and which areas will benefit most? Not old industrial centres dependent on Govt spending, I suspect
July 17, 2011
The city of Cambridge is booming too and the background speech is of East Europeans, Polish in fact when you stand outside the shopping centre. Serious people on serious business, young Chavy looking women included. How does the average British Chaver deal with this competition? The short answer is they don’t.