London risks falling behind in the race for high-value investment and tourism because it lacks the assets and financial firepower of global rivals, according to a new report.
The independent study by Deloitte found that London’s promotional budget compared poorly with the greater amounts available to traditional rivals. For example, Paris spends £40m a year, New York £22m, and Berlin £38m, when compared to that of London & Partners – London’s official promotional agency and main route to market – with a budget of just £18m.
However, this shortfall was nothing compared to global cities from fast-growing economies, with Singapore benefitting from £201m for promotional purposes, and Hong Kong £253m.
These vastly larger budgets include commercial revenue from city-owned assets (such as conference centres) – another weapon largely lacking in London’s armoury, according to ‘Benchmarking the effectiveness of London’s promotional system’.
The report, which compares the effectiveness of London’s promotional system with those in Paris, Berlin, Hong Kong, Singapore, Toronto, New York and the FDI promotion system in the Greater Washington Area, warns that the British capital faces significant challenges and has ‘no room for complacency’ in an increasingly competitive world.
- The allocation of more funding for London’s international promotion
- Better leverage of assets owned by the city
- Raising more commercial revenue in order to better promote the capital, which, in turn will bring additional benefits to the rest of the UK.
John Dickie, Director of Strategy at London First, which co-commissioned the independent report, said while London was highly attractive to foreign direct investment and tourism, the city couldn’t rest on its laurels.
“London needs to up its game and spend significantly more on promotion if we are to remain competitive in attracting tourists, students and inward investors to the UK, particularly from emerging markets,” he said.
Kit Malthouse, Chair London & Partners, welcomed the findings, calling them “an accurate representation of the challenges London faces if the city is to remain the best place in the world to do business and the best place to visit”.
“Last year London & Partners generated £280 million for the city’s economy and helped create over 7,600 jobs,” he said.
“For every £1 of grant funding and private sector income the company received it attracted £15 of additional wealth, so as a promotional organisation it already punches well above its weight in terms of providing a fantastic return on investment.
“However, we need to continue the momentum generated by hosting the Olympic Games in 2012 in order to see a thriving capital city over the coming decades which is able to compete on a level playing field with any other fast-growing global city.”
Greg Clark, an expert on city economies who has advised over 100 city governments, said the UK lacked the tools to promote itself outside the realms of central government.
“Simply put, L&P is under-funded and under-powered for the task at hand,” he said.
“One of the main reasons for this is that devolved power plays a much greater role in cities like Berlin, New York, Singapore, and Hong Kong – it gives them the assets and incentives to promote their offer and play to their individual strengths.”
Tourism, inward investment and trade are major sources of economic opportunity for the London economy.
In 2013 a record 16.8 million overseas visitors came to the capital, and the London tourism economy is now estimated to be worth £36 billion, supporting 700,000 jobs.
Meanwhile in 2013 an estimated 584 inward investment projects were secured in the capital.