Ken or Boris? The winner could be in trouble

May 2nd, 2008

The results of the London Mayoral race are due to be announced in a few hours and while everyone is interested to see who will win (I will put my neck on the line and predict Boris), more practical people are beginning to point to the difficult job the mayor will have running London over the next months/years. The most important (because it is the most expensive) is the Crossrail project which is currently estimated to cost £16bn. Responsibility for the management and delivery of this huge scheme rests with the mayor. Scrutiny of how it is progressing and how costs are being controlled will be intense. Only slightly smaller, but equally momentous, is the £9.3bn cost of the 2012 Olympics, the countdown to which begins in earnest in August. The mayor will be a figurehead for the Games in the crucial preparatory phase. The mayor will be held accountable for ensuring that London’s much-criticised transport network can cope with the unprecedented demands put on it by the event. He will also be expected to help guarantee the dream of a large and sustainable legacy from 2012, boosting everything from employment opportunities to sporting facilities. Then there is the much smaller but politically potent sum of £252m, the amount paid by drivers in congestion charge payments last year. Whoever wins the election, this topic will be hotly debated in the months to come. In addition to the real pressures of 2012 and Crossrail, the economic environment is far less favourable now and this could mean problems for the new incumbent. As an economic powerhouse and global brand name, London has been a unreserved success in the past 20 years. Its growth has been so dynamic that it now accounts for about a fifth of the UK’s total GDP and 15% of all its jobs. The City has been the cornerstone of this growth, with more than half a million jobs being created in financial services since the mid 1990s. London has eclipsed New York as the preferred destination for companies wishing to raise capital by listing their shares. The City now generates annual export earnings of £24bn. But London’s pre-eminence as an international financial capital, with more than 30% of its jobs depending on banking and business services, makes it particularly vulnerable to the current global credit crunch. Some estimates have put likely City job losses in the next 18 months as high as 20,000, although the ultimate figure may be much lower than this. One thing is certain, despite being described as the most “powerful” directly-elected official in the land, the new mayor will find that his honeymoon period is even shorter than normal this time around.

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Ken or Boris? The winner could be in trouble

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