Is London the safest place in the world to do business?

In his penultimate column of 2012, Thomas de Freitas ponders whether the streets of London really are paved with gold

New York has had a rough start to the 21st century. Heralded by 9/11 and recently battered by Frankenstorm Sandy, the seemingly invincible American super-city has publically paraded its vulnerability to the watching world. For the first time since the Blizzard of 1888, forces of nature have conspired to close Wall Street for an historic two consecutive days.

Similarly Tokyo, which sits on two of the most dangerous and volatile tectonic plates. The death and destruction caused by earthquakes in Japan peppers their history, the latest as recently as March 2011, a massive quake of magnitude 9.0 which sparked global concern over nuclear disaster following meltdown at the Fukushima Daiichi power plant. Worryingly, scientists predict that the chances of a ‘big one’ hitting Tokyo directly within the next four years is as high as 70% – a disaster which, if comparable to the quake of 1923, would claim the lives of around 100,000 people and cost the economy at least $1 trillion.

When deciding where to locate a business, access to markets, availability of quality staff, transport links (internal and external), and the quality of telecommunications are regularly cited as the most important factors. Indeed, according to a paper by Cushman and Wakefield, when taking into account all these factors, “London is still ranked – by some distance from its closest competitors – as the leading city in which to do business”.

London is the most well connected of all global cities. We are only eight hours away from New York (Tokyo is thirteen), and the ease of access to clients across major European business destinations – Paris, Frankfurt, Amsterdam, Berlin, Manchester, Birmingham – means markets, customers and clients are on our doorstep.

Furthermore, London is by far the busiest aviation centre in the world (when flights from all airports in a city are combined), with around 130 million passengers passing through our airports annually; second placed Tokyo, by comparison, handles a mere 100 million passengers yearly.

Indeed, a 2011 WWF study shows Heathrow to be in ‘a class of its own’ as far as its inter-connectivity to other key economic centres. With business travel an increasing requirement for many, London truly makes the world a smaller place.

If we’re talking telecoms, London must be the global leader. Next year, ‘Project Express’ will begin transmitting across the Atlantic, reducing the time it takes data to travel between New York and London. Though immaterial to John Doe walking down Regent Street or 5th Avenue, the new speed this will generate – 59.6 milliseconds, down from the current speed of 64.8 milliseconds – could be worth millions to a financial firm’s bottom line.

Moreover, traders and law firms are further set to benefit from a new low-latency network between London and Hong Kong, able to conduct data in around 176 milliseconds. These high-speed data networks support global connectivity and position London as the business gateway par excellence to Asia, America and Europe.

All businesses face some degree of risk due to procedures, policies, and market conditions. One of the highest risks comes from recruiting, employing and relocating employees – made particularly difficult if you’re located in an undesirable area. Without access to the best talent, companies risk losing their competitive edge. Indeed, New York, though boasting a large pool of qualified and experienced talent, nonetheless faces higher employment risks than cities like London and Singapore due to greater violence, crime rates, and higher healthcare and benefits liability.

There are business powerhouses – and then there is London.

Basking in our Olympic success and renewed support of the monarchy, the mood in the Big Smoke remains jubilant and celebratory. Our weather may be dreary, but we live without fear of devastating natural disasters.

Even the bad – the riots of 2011, the tube bombings of 7/7 – served to highlight positives: our capital’s incredible resilience and community spirit. Furthermore, we have negotiated our way out of the recession in better shape than many other capital cities – the Royal Docks currently representing the biggest investment opportunity in Europe – and we consistently attract the largest number of visitors, as well as greatest visitor spending, of any city globally (Mastercard Global Cities Report 2011).

Our fortune to live and trade in London, with its low geographical risk yet high geographical visibility, cannot be overstated. With apologies to Samuel Johnson, “When a company is tired of London, it is tired of business”.

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