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Urban dynamics influence on the changing economic character of London

Updated on November 7, 2016
London is the capital city of Great Britain
London is the capital city of Great Britain | Source

In London, a large city in the developed world, there are strong relationships between urban dynamics and the city's changing economic character. The urban dynamics of suburbanisation, urban renewal and consolidation all affect London's economic character. These changes are manifested in London's changing role as a capital city, the changing employment structure, the changing residential centre and the changing financial centre.


Location of London

London is the capital of Great Britain. It is located in southeast England, between 51 and 52 degrees north of the equator, and between 1 degree west and 1 degree east. It has a population of more than eight million people. Its economic character is constantly changing. During the 1980s, many saw its position as a world city at the heart of the global financial system under threat. Conversely, in the 1990s, the economy shifted and grew during the 1990s, with a new emphasis on the financial sector and also the hospitality industry, reflecting its place as a major tourist destination. It contrast, employment in manufacturing has fallen sharply; between 1991 and 1996, employment in this sector dropped by 26%. This is due to the closure of inefficient factories, the relocation of factories and the rationalisation of the workforce as a result of technological changes. The city's economy is currently worth £309.3 billion per year, or 22% of UK's GDP. Overall, it has become a post-industrial city with fewer than 10% of the workforce employed in manufacturing and growth in services and the financial sector (one-third of the city's workforce).


London's economic growth and employment growth
London's economic growth and employment growth | Source

The urban dynamic of suburbanisation has a considerable impact on this changing economic character. Specifically, suburbanisation - in conjunction with decentralisation and ex-urbanisation - has an effect on the city's role as a capital city, as well as its employment structure and residential centre. Suburbanisation is the movement of people, employment and facilities away from the inner city towards outer urban areas. As the outer areas of London have become more desirable, partly due to the British government's policy of decentralisation, the public service has moved away from inner London to regional locations. Between 1962 and 1979, 55000 jobs were moved out of London. Compared with the 1950s, when there were around 500,000 public service positions in London, there are today only around 350,000. In addition, in the years following World War II, thousands of skilled workers moved out to the suburbs and the New Towns beyond London which were established by the government. Likewise, manufacturing in inner London declined rapidly as many small companies closed down and larger companies relocated outside London where larger areas of land were available more cheaply. The same phenomenon involving suburbanisation, decentralisation and ex-urbanisation occurred with the docks, where large ports closed down as the docks were moved downstream closer to the sea, resulting in the loss of 25,000 jobs between 1969 and 1981. As factories and jobs have moved outwards in London, the workers often moved with them to keep their jobs. Generally, wealthier residents have moved outwards, leaving the inner city areas to those who are poorer.

London Docklands before regeneration and urban renewal
London Docklands before regeneration and urban renewal | Source

In addition, urban renewal is closely related to London's changing economic character. Here renewal - the redevelopment of an urban area - has had impacts on employment structure, the financial centre and the residential centre. As a result of the move towards outer London and regional centres, many urban areas have been diminished in value by urban decay - that is, the deterioration of the built environment. However, concerted efforts at redevelopment generally follow. For employment, with factories and docks increasingly drawn to outer London, the London Docklands Development Corporation (LDDC) redeveloped derelict areas in the London Docklands, between 1981 and 1998. The LDDC attracted corporations and skilled workers to the Docklands by investing £1.86 billion in the public sector and £7.7 billion in the private sector, as well as overseeing the construction of the Docklands Light Railway, creating 144 km of new roads, selling 1,066 acres of land for redevelopment, reclaiming 1,184 acres of derelict land and building 24,046 new homes. Also, due to London's reaffirmed status as a world financial centre and the onset of privatisation, the financial sector in the City of London has been boosted, and renewal has followed. Today, the City's financial sector employs 700,000 people directly. Consequently, parts of inner London have become gentrified, leading to increased spatial exclusion, as young urban professionals seek to protect their luxurious lifestyles with security systems and high walls. In the Docklands, the proportion of council-owned housing diminished by 50% between 1981 and 1991, as the proportion of people employed in manufacturing in the area decreased from 41% to 14%. While the process of suburbanisation continues, so too does the cycle of decay, renewal and spatial exclusion.

London Docklands after regeneration
London Docklands after regeneration | Source

Lastly, consolidation in tied with London's changing economic character. Consolidation denotes policies that encourage high population densities in established suburban areas, usually through planning regulations allowing more dwelling units on a given area of land through subdivision or strata title. In London, urban consolidation has changed the financial sector and also the residential sector. With London having strengthened its position as a world financial centre by the mid-1980s, the demand for office space in inner London has greatly increased. As a result, economic rent in London has also increased, and higher density buildings are being constructed to meet the demand. Additionally, consolidation is often seen as the best way for corporations to maximise efficiency so that workers are clustered together. Around 70% of the City of London is taken up by office space; buildings like the Canary Wharf Tower (235m, 50 floors) and the HSBC Building (200m, 45 floors) obviously acquiesce to the trend of consolidation. Furthermore, consolidation has affected the residential patterns of London. The population density of inner London in 1965 was ten times as great as the outer boroughs. As a result of this overcrowding, the government replaced traditional terrace and semi-detached housing with high-rise housing estates, modelled on the cheap housing blocks then being built by the Communist government in Eastern Europe. The fact that these estates often fall into disrepair and become undesirable urban blights leads to more suburbanisation, renewal and consolidation, and more shifts in London's economic character.

Evidently, in London, there are strong relationships between urban dynamics and the city's changing economic character. The urban dynamics of suburbanisation, urban renewal and consolidation all affect London's economic character. These changes are manifested in London's changing role as a capital city, the changing employment structure, the changing residential centre and the changing financial centre.

© 2016 Billy Zhang

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