Capitalism divided? London, financialisation and the UK’s spatially unbalanced economy

Abstract

The UK economy is one of the most geographically unequal among OECD countries, with London's lead having increased since the mid-1980s. The UK is also one of the most centralised, in terms of the overwhelming concentration of economic, financial, political and institutional power in the capital, London. A key question, therefore, is whether the latter feature is a cause of the former. This paper focuses on one aspect of this question, namely London's dominating role in the UK's financialised, neoliberal-globalised growth model that has held sway for the past forty years. It is often argued that London's pre-eminence in finance acts as an engine of national growth, delivering benefits to all regions through ‘trickle down' effects. We argue that these claims are exaggerated and that much more need to be known about London's negative impacts on other regions and cities, about the geographical dimensions of what some have labelled the ‘finance curse'. We argue that such negative effects are integral to the growth of regional inequality in the UK. The Government's new ‘Levelling Up’ policy, though innovative in some respects, remains subordinate to the promotion of London and finance, and is unlikely to decentre and spatially rebalance the economy.