Capitalist Capital

Now that London is driving a revival in the UK's economy there will no longer be any mileage in anti-capitalist rhetoric

At last the British economy has taken off. After years of slow or non-existent growth, Britain is now overhauling its only European rival, Germany. The consensus now emerging is that UK growth will be faster than Germany’s this year, next year and the year after.  In  the summer issue of the New York Review of Books, my old friend Timothy Garton Ash has a magisterial essay on “The New German Question” which is based on the premise that Germany is “Europe’s undisputed leading economic power”. Well, in absolute terms this is a statement of the obvious: Germany has the largest economy — about a fifth of the EU’s entire GDP. But in relative terms, it is Britain, not Germany, which is now setting the pace for the rest of Europe. More precisely, it is London that acts, more than ever before, as Europe’s cerebral cortex, the seat of its intelligence. London’s population has grown by an eighth, more than a million, in the last decade; Berlin’s, by comparison, is still roughly where it was at the time of unification in 1990. All attempts by Lilliputian continentals to tie down the Gulliver on the Thames will fail. 

Yet where does this magnet for wealth and talent leave the rest of Britain? Travelling north, east and west this summer, I was struck by two things: the gulf between London and the regions has grown, but the latter’s resentment of the former depends very much on generation. The young are not afraid of London, still less envious: they just wonder how they will ever be able to afford to live and work there, when doing so means competing with the rest of the world. They know that one can live more comfortably than in London in, say, Yorkshire or Devon on half the salary. Older people tend to feel more wary of, or even hostile to, the capital, despite the fact that London and its environs heavily subsidise health and other public services elsewhere. Yet there is a curiosity, too, among hardier perennials about this protean metropolis, which is full of smartly dressed, silver-haired sightseers up from the country. 

One attraction of the newly fashionable East End is Tech City, the hub of Britain’s cyberspace start-ups, which enjoys a symbiotic relationship with its two leading global counterparts: Silicon Valley in California and “Silicon Wadi” on Israel’s coast. The latter’s dramatic emergence is the reason why Israel has recently become the UK’s biggest trading partner in the Middle East. Britons are voting with their credit cards to buy Israeli technology, ignoring diplomatic snubs, academic boycotts and the best efforts of the EU bureaucracy (led by our very own Cathy Ashton) to penalise firms that trade with Israeli settlers. Technology trumps ideology. 

The character and outcome of the 2015 election will be largely influenced by the fact that London remains the capital of capitalism. There is no longer any mileage in the anti-capitalist rhetoric that was fashionable after the crash of 2007-08. To paraphrase Calvin Coolidge: the chief business of the people of London is business.

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