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Bagehot
Reykjavik-on-Thames
Jan 29th 2009
From The Economist print edition
London’s other names, and what they say about Britain’s recent history
LONDON doesn’t really have a nickname. At least, it doesn’t have one that has stuck in the way that, say, the “Big Apple” has to New York, the “City of Light” to Paris or the “Windy City” to Chicago. In the last decade, however, during New Labour’s long supremacy, visitors have bestowed a series of sobriquets on it: epithets that have captured the world’s shifting perceptions of London and Britain, and the city and country’s own changing preoccupations. The sequence nicely encapsulates Britain’s evolving place in a globalised world—and its doubtful future.
Begin in the late 1990s, when the London property market recovered from the recession that had struck earlier in the decade. In the docklands—bombed by the IRA in 1996—the skyscrapers that had once seemed unviable filled up. The new government cemented its pact with the City: skimpy regulation in return for the growing tax revenues that helped to fund Labour’s social programmes. Rents and ambitions soared. London became known, among financiers and architects, as Manhattan-on-Thames.
Manhattan-on-Thames was briefly the capital of a brand new nation: Cool Britannia. This was, according to the marketing men, a dynamic, modern, relentlessly neophile country—a land of Britpop, attention-seeking art involving unmade beds, and meetings in Number 10 between edgy rock stars and the new, thrusting prime minister. History seemed to have ended; Britain was embracing the world; things could only get better. All that now seems to belong to a distant, prelapsarian, naive age.
The debacle of the Millennium Dome finished off Cool Britannia; the terrorist attacks in New York and Washington in 2001 inaugurated a more sombre era. Manhattan-on-Thames became Londonistan. The term may have been coined first by French anti-terrorist police—angry at the British authorities’ alleged laxity towards Islamist extremists—but it was used more widely after September 11th. The controversial mosque in Finsbury Park was Londonistan’s emblem. Fairly or otherwise, the Tube and bus bombings of July 7th 2005 seemed to confirm the worries the label implied: nervousness about Britain’s permeable borders, neurosis about multiculturalism and, in consequence, angst about the limits and encroachments of state security.
Yet continuing prosperity partly salved the anxiety. London recovered. Foreigners kept arriving, largely from the countries newly admitted to the European Union. But others came too, among them an influx of flamboyant Russians, some of them keen to launder their money and reputations and attracted by London’s reliable courts, supposedly safe banks and kind tax regime. They brought joy to upmarket estate agents, private-school headmasters and the footballers whose salaries they inflated (they also, less benignly, brought intrigue and polonium). Londonistan gave way to another nickname: Londongrad.
Londongrad was a metropolis of lunatic house prices and multiplying restaurants, ornamented by rich foreigners and serviced by poor ones. For a few years it seemed to be the capital not only of Britain but perhaps of the world too: the epicentre of globalisation. For many businessmen and financiers it was a no-questions-asked utopia of perpetual growth, lavish bonuses and capital flows, and unlimited easy credit.
Until the credit dried up. Now, suddenly, jobs are evaporating, the pound is falling, banks may soon proceed from partial to full nationalisation. The politicians who boasted of their light-touch regulation denounce the “casino capitalism” they encouraged. And as the New York Times has noted, some economists and traders have begun to refer to London by an ominous moniker: Reykjavik-on-Thames. Like the Icelandic capital, London is home to a stricken financial industry that once underpinned the economy, and to banks whose liabilities dwarf national output. As in Iceland the banks’ collapse has catalysed a new recession and rising unemployment, and may well contribute to the fall of a prime minister—even if Gordon Brown’s defenestration is likely to be more decorous than that of his ousted Icelandic counterpart.
“Reykjavik-on-Thames” exaggerates Britain’s predicament—probably. But it captures the way in which, at the moment, the country looks to some to be as much a victim of globalisation as its champion and beneficiary.
Peering into the abyss
Manhattan-on-Thames; Londonistan; Londongrad; Reykjavik-on-Thames: how will London and Britain be seen in a few years? According to David Cameron, the leader of the Conservatives, London will—at least if he becomes prime minister—be the capital of a freshly responsible nation. The financial miscreants will have been carted out of the City on the “day of reckoning” he promises; the rest of the city and the country will live within their means and save for a rainy day. London will be a sort of Grantham-on-Thames (Grantham being the home town where Margaret Thatcher acquired her faith in thrifty self-sufficiency). In Mr Brown’s imagination, London will have been reborn as Rooseveltville, resplendent with new train links, Olympic stadiums, airport runways and other job-creating grand public projects.
According to the most doom-laden predictions, meanwhile—in which the pound collapses utterly and the country goes bust—the city might look rather as it did in Victorian and Edwardian times, with legions of unemployed relying on sparse social services: London could revert to a somewhat more humane version of the “city of dreadful night”, “the empire of hunger” and “the abyss”, as it was known to sociologists a century ago. But it seems more likely that London will simply resemble the less prepossessing city it was in the 1970s and 1980s, before the excesses and excitements of the New Labour epoch: a drabber place, less magnetic to foreigners, worse hit than its rivals—like Britain as a whole—by the global downturn. London, in short, may revert to being plain old London-on-Thames.
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