It must avoid complacency, warns Janan Ganesh

Even for a city with two thousand years behind it, 2012 will be a remarkable one for London. It will hold a mayoral election, just the fourth in its history, in May. Over the summer, it will celebrate Queen Elizabeth’s diamond jubilee, marking her 60 years on the throne. Then, in July, the Olympic games come to town. In 2005, winning the right to host the planet’s largest sporting event (give or take the football World Cup) against competition from Paris confirmed London as the ultimate global city, a cosmopolis whose culture and economy were defined by their openness to the world. 

That victory was soon followed by trauma. First, the terrorist attacks on July 7th 2005, which killed 52 people. Then, in 2008, as Britain entered a recession it is still struggling to exit, London looked likely to suffer disproportionately. Its colossal financial centre and housing bubble were obvious liabilities. The post-national city state was set to become a bit more like the rest of the country: less wealthy, less diverse, less at ease with the furious swirl of globalisation.   

Instead, London got away with it. Far more removed culturally and economically from its host nation than New York, Tokyo or Paris, its economy shrank by less than any other region’s, immigrants continued to flock to what might be history’s most diverse city, and house prices actually rose. 

Working on its weaknesses

London is in a strong position now because it avoided complacency during its long, finance-fuelled boom. Instead, it worked on its weaknesses. London’s transport infrastructure has gone from poor to adequate to verging on good, if expensive. The bus network has been enhanced, Tube lines extended, and the Docklands Light Railway and Eurostar link to Paris built from scratch. Vast new projects—such as Crossrail, which will traverse the city, and an upgrade of the Underground to boost its capacity—are under way. London also, at last, created that elected mayoralty. Since 2000, the city has been able to craft policies that suit itself, such as a congestion charge, a cycle-hire scheme and a permissive planning policy whose latest offspring is the Shard (pictured), which will be the tallest building in the European Union when it opens in 2012. 

But London must remain vigilant to retain its position as perhaps the pre-eminent global hub. Three threats stand out. First, the backlash against the liberal orthodoxies of the boom years could make the capital a harder place to do business. The mayor, Boris Johnson, implores his Conservative colleagues in central government to resist popular pressure for a tough line on immigration, taxation of the rich and banking regulation.

Second, London needs more airport capacity. Heathrow, the busiest international airport in the world, is overstretched. Thanks to local protests and environmental concerns, it is unlikely to get the third runway it wants. To avoid losing traffic (and business) to Paris and Frankfurt, London must either expand its other airports, such as Stansted, or build a new colossus. Mr Johnson would like his legacy to be agreement on a vast new airport in the Thames estuary. 

Finally, London must tend to its social problems. In general, crime is stable but burglary, robbery and some weapon-related crimes are on the rise. Around the world, the city is developing a violent reputation, rather like New York’s in the 1980s. Londoners should be proud that rich and poor are jumbled up far more than in ghettoised cities abroad. But it makes social frictions hard to avoid. Twice in 2011—during the protests against public-spending cuts in the spring and during the riots in August—the Metropolitan Police were briefly overwhelmed by civil disorder. And they will now have to keep London and its visitors secure with less money than they are used to.

London has innate advantages as a global centre. It has the English language. It has an ideal time zone and geographical location. Then there is that openness to the world, shaped by centuries as the heart of a vast empire. It won the right to host the Olympics by presenting itself as a uniquely global, rather than quintessentially British, city. But in a world of intense competition from the booming cities of the East, as well as the more familiar rivalries with the likes of Paris and New York, London cannot rely on its inherent strengths alone. 

Janan Ganesh: political correspondent, The Economist