Ranked as No.1 of the Global Power City Index for 8 years: The Attractiveness of London to Investors
November 19th, Mori Memorial Foundation published a report of Global Power City Index 2019, which evaluates the power of a city from six aspects. According to the report, London has been named the world's most powerful city for 8 consecutive years, followed by New York, Tokyo, Paris and Singapore.
The Top 5 Cities of Global Power City Index, 2010- 2019
Source: Global Power City Index 2019, Mori Memorial Foundation
That’s not the only recognition for the competitiveness and attractiveness of London. The 2019 Global Cities Report of A.T.Kearney points out that London has remained within the top three places of the Global Cities Index rank for 10 years. Moreover, London leap to be the leading city of the Global Cities Outlook rank with great potentials in “Personal well-being” and “Economics”.
The Top 25 Cities in the Global Cities Index and Outlook
Source: A.T.Kearney 2019 Global Cities Report
Economic Development & Business Activities
Although London retained its title as the “World's Most Powerful City”, its overall score fell as a result of the tumultuous Brexit process. However, London as the most powerful city with great commercial potential remains unquestioned.
Over the past five years, London's GDP has grown at a compound annual rate of 3.5%, ranking at the second among all European cities’ GDP growth rates. In fact, the economic impact of Brexit has not been as severe as predicted, as the FTSE 100 remains at upward trend in the last five year.
FTSE 100
Source: London Stock Exchange
Moreover, the uncertainty over Brexit has plummeted with Boris Johnson winning the UK general election. The surge in the British pound on December 13th (the day after UK general election) was a sign of optimism about UK economy.
Source: CNN
Another business attraction of London for investors is the good business environment. For the second year in a row, UK topped the Forbes' list of 2019 Best Countries for Business, and notably, UK was ranked at 14th in investor protection policies. Besides, the World Bank’s report , Doing Business 2020 shows that UK has outstanding performance in improving credit information and documentation compliance for cross-border transactions.
Best Countries for Business– Profile of United Kingdom
Source: Best Countries for Business, Forbes
Driven by economic development and supported by friendly business environment, UK remains the second largest recipient of FDI in Europe in 2018 (the Netherlands is the largest recipient), despite the reduced FDI inflows. London, as the capital of UK, still has great development potential in economic and business.
Human Capital and R&D
London is well recognized as one of the biggest financial capitals. But now the city is transforming and upgrading to be a place for technology and innovation, and the talents plays a crucial role in the transformation process.
According to Mori Memorial’ report, London has great advantages in research and development due to its world-class universities, rich international student community and friendly entrepreneurial environment. London was also ranked the 7th in innovation and the 28th in technology on the Best Countries for Business List of Forbes.
Moreover, ATKearney's report notes that human capital of a city plays an important role in attracting businesses and foreign investment, and London is a big draw for investors on the talent front.
London is becoming an incubator for technology and innovation companies. According to Tech Nation, there were 169 unicorn tech companies in Europe as of 2018, of which 35% were founded in the UK. Last year, UK tech companies attracted a record amount of venture capital investment of ￡6.3 billion, which was more than any other European country.
Key Statistics of UK Tech Companies
Source: Tech Nation Report 2019
London has become the third largest Tech start-up Ecosystem in the world and the largest in Europe after the Silicon Valley in New York, with a total Ecosystem value of $44 billion. With the rapid development of technology, London will certainly continue to be favoured by investors.
Cultural Experience & Information Communication
A large part of the credit of London’s highest score on the Global Power City Index comes from the cultural experience. Mori Memorial’s report showed that London held the top five of 12 cultural experience ratings (out of a total of 16 rating critera). London was also the leading city in aspects of “Sporting events”, “International travelers” and “Culinary offerings”, according to A.T.Kearney’s report
Details of Overall Scores of The Top 10 Powerful Cities
Source: Global Power City Index 2019, Mori Memorial Foundation
The rich cultural experience attracts a large number of international tourists. London saw 19 million international visitors in 2018, far more than any other part of the UK, and more than many of Europe's leading tourist cities such as Paris, Rome and Amsterdam.
Number of Overseas Tourist Visits to London from 2008 to 2018 (in millions)
Source: Statista
London has seen a drop in number of visitors in 2018 due to the global economy slowdown and the uncertainty of the new immigration policy after Brexit. However, the British government has begun to take measures to maintain the stability and promote the development of tourism. In June 2019, the British government issued the Tourism Sector Deal, which illustrates how will the government and companies in the industry cooperate to improve the productivity and competitiveness of UK tourism. It is expected that, the number of UK international visitors will increase 23% on the basis of 2018, and thus reach 46 million by 2025.
Conclusion
The great strength of London comes not only from its solid development foundation, but also from the strong adaptability to new challenges. In terms of hard power, London has caught up with the trend of business development and it provides adequate support for development of technology and innovation. In terms of soft power, London inherits its advantages in history and culture and improves its competitiveness by improving the industrial chain of tourism.
London's transformation and innovation have created a lot of opportunities for investors, and it is believed London will continue to maintain its leading position among the world cities in the future.