October 31, 2013
It's the 80s all over again as London heads for boomtimePosted in Economic History · 155 comments ·
The 328 bus from Golders Green to Notting Hill is as much a journey through the changing ethnicities of London as it is a route home. Last night I hopped on it and watched the unfolding of the ethnic map of Europe’s biggest city and possibly the world’s most cosmopolitan metropolis, as each tribe got on an off, as we moved from area to area, from High Road to High Street.
As the bus left the predominantly Jewish Golders Green so too did the Jews who were on the bus. Indians and Chinese embarked.
The bus moved towards Kilburn. At Kilburn High Road, the bus filled up with older Irish people, immigrants from the 1950s and 1960s. Through the window, I could see the corner shops sold the ‘Limerick Leader’, the ‘Sligo Champion’, the ‘Leitrim Observer’ and, of course, ‘The Irish Post’.
In the 2011 census, Irish-born people were the third largest ethnic minority here, only surpassed by Indians and Europe’s great recent migrants, the Poles. Ten years ago, Irish-born Londoners were the second largest ethnic minority with over 150,000 Irish-born living in London. By 2011 this population had fallen by 20,000 reflecting the ageing of the 1950s emigrants.
The complexion of London is changing and this area is becoming considerably less Irish. For example, data for Brent (Kilburn) shows that the percentage of residents born in Ireland fell from 4.9pc in 2001 to 2.6pc by 2011.
And even though Brent has the largest population who self-identify as ‘White Irish’ in London, it too has fallen considerably from 6.95pc in 2001 to 3.96pc in 2011. That’s a pretty dramatic fall. The Irish are moving out to the suburbs and are being replaced by new migrants as I saw for myself last night, watching the crowds of young Muslims meeting around a madrasa off the Kilburn High Road.
By the time the bus pulled into Westbourne Park station, most of the older Irish had alighted, replaced by younger Middle Eastern and Asian migrants.
The bus captured some of the essence of London: transient, mixed, still territorial. I had started in pre-war Yiddish Poland and ended up in 21st century Bangladesh via 1950s Mohill.
Most of these people are here for one reason: opportunity. And today London is providing opportunity for hundreds of thousands of new migrants. So while it is the third largest Irish city in the world – after Dublin and Belfast – it is also the sixth largest French city. There are more French people living in London than are living in either Bordeaux or Strasbourg.
And over the past few years, tens of thousands of new Irish immigrants, not yet showing up in the census data, have arrived in London.
They are coming to London not only because of a lack of job opportunity in Ireland, but also because London is booming and the rest of the UK is being dragged up with it.
Over the summer, the UK economy grew by nearly 1pc and this comes after three quarters of positive growth, so it is not a mirage. Ireland’s largest trading partner is recovering across the board. It is one of the very few economies where the IMF has actually upgraded its forecasts.
If these growth rates continue, then the Tories will be able to cut taxes in the budget of 2015 and here is the politics of what is happening in the UK, the Conservative Party are trying to do what they have (and in fairness most political parties) tried to do over the years – win an election on the back of a house-price boom.
Property prices are the topic of conversation again in London. Most “normal” people can’t afford to live locally anymore. And the Conservative Party’s answer to this has been to unveil a “help to buy” scheme. The second phase of this scheme has been unveiled in recent weeks, so if you are a potential buyer, as long as you put down a 5pc deposit, the UK government would pay up to a further 20pc of the property’s value to the developer, meaning you would need a maximum 75pc loan-to-value mortgage to buy a house.
This is sending mortgage applications through the roof and obviously house prices are heading up rapidly as well. On top of that, central London is the second home of choice for the world’s mega-rich. It is arguable that the central London economy, due to a mix of the world’s wealthiest people, is the true underlying strength of the London economy.
As we know only too well, when property prices begin to rise, a virus- like contagion takes hold, and people get scared into buying.
Normally in economics when prices rise, demand falls, but when a government and a banking system start to finance a housing boom, the very rise in prices doesn’t deter demand, it actually boosts demand because people think if they don’t buy now, houses will be even more expensive next year and they will be left behind. Of course, house building cranks up, as it is doing in the UK where construction activity surged 2.5pc – the highest quarterly increase since early 2010.
And obviously with all this activity, centred on London, prices are rising. Britain has the highest inflation rate in Europe. And as price rises have outstripped wage growth for almost half a decade now, retail spending is being buoyed up by credit and by debt. Credit-card spending is now at a 10-year high.
So will the Conservatives do what Thatcher did in 1987 and Blair did twice – use property price rises and the associated consumer boom as a lever to win the election?
It’s looking likely. As I watch the demented shopping crowds head for Love Pink off Bond Street, there is a real late-1980s’ feeling to London.
And we all know how that ended.
David McWilliams hosts Kilkenomics next weekend in Kilkenny. www.kilkenomics.com.