London retains second spot in global cities list despite human capital hit

In spite of the political turmoil the US currently faces, New York remains the best city to live in in the world, according to a new study. And despite the legacy of Brexit seeing business scores fall, London has retained its reputation as the world’s number two.

The 2024 Global Cities Report is produced by global management consulting partnership Kearney. Each year, the firm combines studies for a Global Cities Index (GCI) and a Global Cities Outlook (GCO), to consider which cities are best placed to weather the challenging economic conditions faced by cities and city leaders around the world.

According to the GCI, New York’s reputation as a key financial hub is still cause for it to lead the way as the best city to live in in the world. The famous US metropolis retained its top spot for the eighth year in a row, holding a leading position in Kearney’s business activity metric, while posting second-place rankings across key categories including hosting global services firms and start-ups worth over $1 billion. The Big Apple also retained its first-place rank and increased its overall score in the human capital dimension.

Following in second once again, London showed evidence of a stronger macroeconomic environment, following the certainty delivered by a decisive general election result – although the interest rate environment remains uncertain – ranking seventh in business activity, and jumping from 11th to eighth place in capital markets. However, the UK capital did suffer a small score decline in business activity, as well as a decrease in human capital score, driven by barriers to entry into the United Kingdom following Brexit. At the same time, while London retained its fourth-place rank in the information exchange dimension, its overall score suffered due to poor internet speed, where it ranked 97th globally.

This meant that things were less rosy for London when it came to the more future-oriented GCO listing. In 2022, London topped that particular ranking, but now Kearney does not even place it in the top 10. Instead, the GCO suggests that several European and North American hubs may be rapidly gaining ground on the UK city. Chief among them were San Francisco and Munich.

San Francisco is seen as the top city of the future, with continued dominance in innovation, as well as improvement in personal well-being – driven in part by a better healthcare outlook for its residents – and governance. Paired with the city’s continued strong performance in the GCI, rising by three spots this year, the City by the Bay remains a prime example of how the innovation economy (especially in the grip of AI hype) can boost the local community.

Munich rose sharply from its ninth-place 2023 showing, driven by strong performance in economics, innovation, and personal well-being. The most significant driver in economics was a major increase in FDI score, showing stronger investment flows into Munich, as well as a 26.3% increase in GDP per capita—strong indicators of economic resilience for the Bavarian economic hub despite energy market shocks, high costs of capital, and geopolitical tension.

Brenna Buckstaff, Principal in Kearney’s global business policy council, commented, “London continues to stand strong in the Global Cities Index, thanks to its leadership in capital markets and cultural influence. With £63bn pledged at the recent London Investment Summit, it’s clear that both the UK and London are where businesses want to be. But this can’t be taken for granted. Cities like San Francisco and Munich are raising the bar in digital infrastructure and governance, while Singapore is growing in business activity. With shifting trade and global uncertainty, London could benefit more by broadening its global reach to maintain its competitive edge.”