London was just crowned the best city in the world but Britain’s vote to leave the European Union — Brexit — threatens the capital’s status even if nothing really changes.
PwC, in collaboration with BAV Consulting, surveyed a group of 5,200 people from 16 countries about where they believe the best cities in the world to be.
The demographic was made up of “an equal number of business decision makers, informed elites, and other general population adults over 18 years of age.”
London hit the number one spot in the ranking of 30 best cities in the world after the respondents scored the capital highly across 40 metrics, which included infrastructure, influence in terms of economics, politics, as well as culture, entertainment, and great food.
Matthew Lieberman, a director at PwC, told BI that Brexit could damage the perception of London as an open city and this could have a negative impact on the country overall.
“London scores number one in the metric ‘connected to the rest of the world,’ number two in political influence and number two in being a leader; these attributes are contributing to London’s position as the number one city overall — but they could foreseeably be impacted by Brexit,” said Lieberman.
“We’ll have to see if it manages to keep the same ranking next year, or if, due to Brexit, we see a slip. We do not currently have empirical data on this, but based on judgment and anecdotal evidence, we would presume that there’s still a lot of uncertainty and perceptions are in flux.”
Improving perceptions of a city will also improve perceptions of the country
It may not sound like a big deal if people change their view of London post-Brexit. However, according to PwC’s report entitled “Empowering city brands: Bridging the perception and reality divide,” perception can have a significant effect on a country’s economy.
“Our study shows that city per capita GDP and perceptions of the city are closely tied — with a 65% correlation between per capita GDP and a city’s score in Best Cities. With an R-squared (explanatory power) of 43%, this hints at the fact that perceptions are a big driver of City GDP,” said Deborah Bothun.
“We also know that cities are a big component of country GDPs. The report notes, for example, that cities account for 90% of the GDP of the US.
“City and country brands are very closely tied, so improving perceptions of a city will also improve perceptions of the country. For example, we found that Rio de Janeiro and Brazil are perceived to be very similar on the dimensions that define country and city brands (97% correlation), same with country/city combinations like Australia and Sydney (96%) , Japan/Tokyo (94%).”
If people perceive London to be less-welcoming, it could hurt the city’s position in the rankings. This is a real risk.
Britain’s prime minister, Theresa May, said she aims to trigger Article 50 and start the official two-year negotiation period for the UK to exit the EU in 2017. Sterling has been at a record 31-year low since June 23 when Britons voted for a Brexit, while companies and banks are looking to move jobs to Europe.
So, while nothing has physically changed yet, changing perceptions could send shockwaves across the country.