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The Death of London


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When something has gone on for decades, like the concentration of people in London, it is easy to imagine the trend is inevitable, and will continue forever.

However, those of us with long memories will remember the 60's and 70's, when London was shrinking, as industry fled, and areas like the docklands and swathes of South London were urban wastelands similar to the industrial North. The Jubilee line extension was repeatedly postponed due to lack of demand.

A couple of items that suggest to me that the depopulation is about to begin again.

https://www.ft.com/content/86845750-b4f0-11e7-a398-73d59db9e399

Quote

HSBC UK retail arm close to filling new Birmingham office

http://www.cityam.com/275381/tfl-says-major-tube-upgrades-northern-line-and-jubilee-line

Quote

TfL says major Tube upgrades on Northern Line and Jubilee Line cancelled because of unexpected dip in passenger numbers

Industry fled London because of high costs compared to the rest of the UK.

Finance stepped in to replace the industry, helped by concentration effects.

But the internet and communication technology means that any finance job that doesn't actually need face to face contact can be done pretty much anywhere.

Deutsche Bank has already moved lots of work to Birmingham:

http://www.birminghampost.co.uk/business/business-news/eyes-banking-world-birmingham-deutsche-7366789

Quote

Eyes of banking world on Birmingham as Deutsche Bank expands

The more banks that move there, the better the resource base for others considering the move. Edinburgh and West Yorkshire are other areas with lots of finance resources ripe for 'inshoring'.

Some hedge funds have already set up in Oxford, much more convenient for both mathematical graduates and grand homes in the Cotswolds.

On a countrywide macroeconomic level something already seems to be afoot. From the 1970's to the noughties, when the UK pulled out of recession, inflation started in London and the South-East before unemployment had dropped in the North. This time seems to be genuinely different. Unemployment has dropped across the country, to 1960s levels, but inflation (other than the house price variety) remains remarkably low. Partly this is due to migration of people to London, but only partly. It appears jobs have also migrated out of London as well, relieving inflationary pressure in the capital.

For the long term the Tube article is warning of things to come. The main extra cost in London is house prices. But London's tranport system is also very expensive. It only very recently stopped receiving central government subsidies, and just ten years ago received as much subsidy as the whole of Network Rail.

If London does start to lose jobs and population it can't afford its transport network.

Cuts will be needed, but, with very high fixed overhead costs, this will start off a vicious circle of reduced services and reduced revenue.

And if London holds out the begging bowl to the rest of the country, how do we think Scots, Welsh, Northerners and Midlanders are likely to respond?

 

 

Edited by kagiso
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Good call. I'd add a couple of other things to watch. 

1) High rents in London will eventually discourage graduates from coming from the rest of the UK to London to work. It seems rents in London have just about peaked now. 

2) The stamp duty exemption for first-time buyers will also provide another incentive for young people to stay away from London. Their deposit will go further. 

3) Clustering. Once enough people have left London to find a better cost of living / qualify of life balance, their friends will follow them. 

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28 minutes ago, kagiso said:

When something has gone on for decades, like the concentration of people in London, it is easy to imagine the trend is inevitable, and will continue forever.

However, those of us with long memories will remember the 60's and 70's, when London was shrinking, as industry fled, and areas like the docklands and swathes of South London were urban wastelands similar to the industrial North. The Jubilee line extension was repeatedly postponed due to lack of demand.

A couple of items that suggest to me that the depopulation is about to begin again.

https://www.ft.com/content/86845750-b4f0-11e7-a398-73d59db9e399

http://www.cityam.com/275381/tfl-says-major-tube-upgrades-northern-line-and-jubilee-line

Industry fled London because of high costs compared to the rest of the UK.

Finance stepped in to replace the industry, helped by concentration effects.

But the internet and communication technology means that any finance job that doesn't actually need face to face contact can be done pretty much anywhere.

Deutsche Bank has already moved lots of work to Birmingham:

http://www.birminghampost.co.uk/business/business-news/eyes-banking-world-birmingham-deutsche-7366789

The more banks that move there, the better the resource base for others considering the move. Edinburgh and West Yorkshire are other areas with lots of finance resources ripe for 'inshoring'.

Some hedge funds have already set up in Oxford, much more convenient for both mathematical graduates and grand homes in the Cotswolds.

On a countrywide macroeconomic level something already seems to be afoot. From the 1970's to the noughties, when the UK pulled out of recession, inflation started in London and the South-East before unemployment had dropped in the North. This time seems to be genuinely different. Unemployment has dropped across the country, to 1960s levels, but inflation (other than the house price variety) remains remarkably low. Partly this is due to migration of people to London, but only partly. It appears jobs have also migrated out of London as well, relieving inflationary pressure in the capital.

For the long term the Tube article is warning of things to come. The main extra cost in London is house prices. But London's tranport system is also very expensive. It only very recently stopped receiving central government subsidies, and just ten years ago received as much subsidy as the whole of Network Rail.

If London does start to lose jobs and population it can't afford its transport network.

Cuts will be needed, but, with very high fixed overhead costs, this will start off a vicious circle of reduced services and reduced revenue.

And if London holds out the begging bowl to the rest of the country, how do we think Scots, Welsh, Northerners and Midlanders are likely to respond?

 

 

But we don't want Douchebag in Birmingham! Or any other human rubbish from the City of London. <_<

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22 minutes ago, zugzwang said:

But we don't want Douchebag in Birmingham! Or any other human rubbish from the City of London. <_<

Yes you do unless you want to carry on being the very unfashionable ugly relative of London and Manchester....and don't bang on about the car industry - new Jag E Pace made in Austria only Engines from the UK...

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39 minutes ago, Patient London FTB said:

Good call. I'd add a couple of other things to watch. 

1) High rents in London will eventually discourage graduates from coming from the rest of the UK to London to work. It seems rents in London have just about peaked now. 

2) The stamp duty exemption for first-time buyers will also provide another incentive for young people to stay away from London. Their deposit will go further. 

3) Clustering. Once enough people have left London to find a better cost of living / qualify of life balance, their friends will follow them. 

We could of course give council homes to people coming to London to work, rather than those who don't.

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10 minutes ago, fru-gal said:

Good thread. Also this; https://www.theguardian.com/commentisfree/2017/jul/30/can-exodus-from-london-be-good-for-britain-reviving-the-regions

I think a mixture of Brexit, technology, high prices and social decline will be the death knell of London. 

And rightly so, London isn't working for anyone. The regions or Londoners. It will decline but I think the fall is a little bit  hyped up it's got a long way to go and many alternatives in terms of revenue streams from Tourism to technology and creative hubs

Not sure Brexit a massive factor nor technology. House prices and general social decline will be the drivers.

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I think I read somewhere that the London commuter train routes (from further afield) have also had a drop-off of passenger numbers.

This is problematic, apparently, as the franchise packages for the operators is built on ever-increasing demand and growth.

Edited by Errol
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2 minutes ago, Errol said:

I think I read somewhere that the London commuter train routes (from further afield) have also had a drop-off of passenger numbers.

This is problematic, apparently, as the franchise packages for the operators is built on ever-increasing demand and growth.

As a commuter, I find it hard to believe that there are less passengers.

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I hope it doesn't turn into Zurich (banks) or Hannover (old money), they're the dullest places I've ever been to. I'd prefer it be like Berlin, a capital city but lots of interesting character and cheap housing, or Madrid which just oozes culture from every pore but doesn't suffer hyperinflation in everything. 

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2 minutes ago, Up the spout said:

I hope it doesn't turn into Zurich (banks) or Hannover (old money), they're the dullest places I've ever been to. I'd prefer it be like Berlin, a capital city but lots of interesting character and cheap housing, or Madrid which just oozes culture from every pore but doesn't suffer hyperinflation in everything. 

Madrid, yes. Berlin, less so, but still on a massively different cost of living plane from London, .

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11 minutes ago, iamnumerate said:

As a commuter, I find it hard to believe that there are less passengers.

I've found one news item from May 2017 that confirms drop-off (slight) in passenger numbers:

http://www.railtechnologymagazine.com/Rail-News/national-rail-journey-growth-slows-as-gtr-serves-6-million-fewer-passengers

From the above link:

South West Trains was also found to have a disappointing year as well, as journeys fell by 3.2% over 12 months.

with six million fewer passengers travelling on its network last year compared to 2015-16.

The report also stated that in Q4, passenger journeys had decreased by 0.4% compared to the same period the previous year.

Edited by Errol
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1 minute ago, curious1 said:

It's funny that, it's almost as though the more you inflate the cost of travel, the more you restrict demand. Perhaps we've reached peak price-elasticity? People can no longer accomodate price increases so have had to change behaviours instead.

Personally I think people are quite lazy (don't mean that rudely) but being transported somewhere suits their book until the costs become outrageous ie now. Generally alternatives require what someone explained to me as trans modal shift. Cycling like motorcycling requires specialist clothing you have to change out of, many people not prepared to do that.

Perhaps only getting the mainline in and then walking everywhere in London or using a Boris bike is another example.

Negotiating two days at home is perceived as high risk from a career perspective etc 

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14 minutes ago, Errol said:

I've found one news item from May 2017 that confirms drop-off (slight) in passenger numbers:

http://www.railtechnologymagazine.com/Rail-News/national-rail-journey-growth-slows-as-gtr-serves-6-million-fewer-passengers

Newer data here, for the following quarter, directly from the rail regulator

London and South East journeys down 4.5% year on year in the most recent quarter!

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19 minutes ago, Errol said:

I've found one news item from May 2017 that confirms drop-off (slight) in passenger numbers:

http://www.railtechnologymagazine.com/Rail-News/national-rail-journey-growth-slows-as-gtr-serves-6-million-fewer-passengers

From the above link:

South West Trains was also found to have a disappointing year as well, as journeys fell by 3.2% over 12 months.

with six million fewer passengers travelling on its network last year compared to 2015-16.

The report also stated that in Q4, passenger journeys had decreased by 0.4% compared to the same period the previous year.

Wow, surprising considering how crowded Victoria is.

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44 minutes ago, curious1 said:

It's funny that, it's almost as though the more you inflate the cost of travel, the more you restrict demand. Perhaps we've reached peak price-elasticity? People can no longer accomodate price increases so have had to change behaviours instead.

Very true.....train networks know how to kill their customers.....when it costs twice as much to travel on a train, the getting to the station, the parking, the inconvenience, the connections the other side.....why use it?????

Sure they don't want passengers even on the trains with plenty of empty seats......they should talk to and learn lessons from the low cost airlines who now fly with few empty seats.;)

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29 minutes ago, winkie said:

.... wouldn't worry about that, Thames barrier a great investment.....garden bridges a total waste.;)

Its grounds water rising. Not the Thames flooding.

London ha a lot of underground streams. Londin covers lot of land that drained a lot of land.

Removal of industry, which used to use he water, means that the water table is rising - just look at theose oligarchs digging out their basements. Or the cross rail link tunnelling - the documentaries shows water running from he clay.

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I think it took 50 years from the realisation that the Thames Barrier was needed until it was built in the face of Thatcher Govt opposition by the GLC/red Ken. The water got to  within 20cm of the top in 2008. The S.E. is sinking by about 1cm a year,  so by my calculation a similar flood tide today would leave only 11cm freeboard. A large amount of data centres are close to the river around the Isle of Dogs which is protected by the barrier - until it isn't. Birmingham may well become the capital city. Abandoning the palace of Westminster would save quite a lot of money :-)

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