- London ranks below San Francisco, and ahead of San Jose and Hong Kong
- The jump is driven by London’s economic and innovation score
- Manchester’s environmental credentials helped land the city in 30th place
London and Manchester have retained top 30 places in toughly-contested world city rankings, with the British capital climbing to second spot.
The closely-watched Schroders 2024 Global Cities Index upgraded London from third to second place behind US powerhouse San Francisco, and ahead of San Jose and Hong Kong in third and fourth respectively.
Schroders highlighted London’s ‘economic performance and its innovation ecosystem’ as drivers of its 8.7 out of 10 grading, helping to offset its ‘comparatively weaker transport infrastructure score and environmental score compared to other top-tier cities’.
The fund management group said London is ‘not outstanding on any measure’ of economic performance, which encompasses GDP, population, retail spend and median household income, but does ‘passably well’ on each.
London Calling: UK capital regains second place in Schroders’ global rankings
The Index ranks the performance of cities across four key criteria – economic, environmental, innovation and transportation – in efforts to ‘identify those which combine economic dynamism with high quality educational institutions, transformational environmental policies and excellent transport infrastructure’.
On innovation, Schroders highlighted the capital’s ‘world class’ universities such as UCL, Kings and Imperial, while the city also ranks 5th place for venture capital funding flows globally.
But London also ‘suffers from severe road congestion and poor public transport reliability,’ the report said, as well as ‘extremely poor water quality and the high likelihood of future water stress’.
Punching above its weight: Manchester ranks alongside European capitals and mid-sized US cities in the Schroders Global Cities Index
Meanwhile Manchester held onto a place in the top 30 thanks to its environmental score, with the Northern city enjoying ‘naturally cooler climate and low exposure to natural hazards, alongside strong net zero policies with specified emission reduction targets’.
Schroders said: ‘Generally speaking, Manchester performs well on every metric, with no areas where it is being ‘held back’ by an unusually low score. This is what allows it to “punch above its weight” in the index, ranking it amongst European capitals and mid-sized American cities.
‘Although London comfortably beats Manchester on the absolute size of its population, GDP, median household incomes and aggregate retail spend, we do expect median household incomes to grow faster in Manchester than in London over the period to 2033, albeit against a lower base – which boosts its economic score.
‘On innovation, Manchester is somewhat let down on venture capital funding flows, but this is made up for by the strong performance from The University of Manchester on the university side. Unlike London, however, the “long tail” of university performance is less impressive.’
But it was a particularly strong year for US cities, with the artificial intelligence revolution helping to keep San Francisco in first place.
Texan cities had a strong year, with Houston up over 40 places, Dallas rising from 58th to 20th, and Austin up from 45th to 34th.
Shenzhen remains the top-ranked Chinese city, thanks to its position at the forefront of the consumer electronics industry.
Hugo Machin, portfolio manager for Schroders Global Cities, said: ‘This year’s clear winners are the larger US cities such as Houston and Dallas, which have benefitted from a re-appraisal of the transport score used in the rankings.
‘This year, the Index places less weight on walk time and more on overall transport time as we believe cities should take a holistic approach to organising urban transport.
‘Moreover, whilst it will hardly be a revelation to many, data continues to indicate that wealthy citizens are continuing to move to locations that have low crime rates and tax thresholds.
‘This is why Austin, Miami and Charlotte have grown strongly in recent years with Austin now home to more fortune 500 companies than any other location in the US.’
Schroders Global Cities Index 2024: The top 30