Jose Mourinho’s side sit in fifth position in the table and are unbeaten since the first game of the season.
Liverpool are looking to retain the title they won last year, while Pep Guardiola is hoping to see his City side be top dogs in England again.
However, if the Reds are to win the league again this season they will have to do so without inspirational defender Virgil van Dijk.
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The Netherlands international has been ruled out for the season with an anterior cruciate ligament injury, a blow that former Liverpool midfielder Dietmar Hamann believes could be pivotal.
“It will have a huge effect on the title race,” Hamann said on van Dijk’s injury.
“When you lose Van Dijk, he is the best centre-back in the world at the moment.
“What the guy has done since he came to the club – he galvanised them and changed them from one of the most vulnerable defensively to one of the best.
“It also affects your team going forward, because if Van Dijk is not in the team they’re probably a bit more cautious. He’s clearly a big loss.”
Hamann also doesn’t think Man City will be able to regain their title, with the German believing they have “peaked” under Guardiola.
“City haven’t got any strikers at the moment, I think they’ve peaked under Guardiola,” Hamann said. “I don’t see them winning the Premier League or the Champions League in the next few years.
“I think a manager like Guardiola can’t be at a club for more than four or five years. He’s done that at Man City and if you see the players they bring in, there is no continuity and I don’t see them improving enough with the money they’ve spent.”
Jamie Vardy came off the bench to score a customary goal against Arsenal and send Leicester to within a point of the Premier League summit with a first win at the Gunners’ home since 1973.
Vardy, 33, had missed two games with a calf injury but was reintroduced after a largely sterile opening hour at Emirates Stadium and promptly ended a 262-minute Leicester goal drought in the league.
The former England international headed home fellow substitute Cengiz Under’s smart pass to bring up a remarkable 11th Premier League goal against Arsenal in 12 appearances. Only Wayne Rooney, with 12, has more goals.
Until Vardy’s arrival Leicester had barely threatened but they have now won their opening three away league games for the first time.
Arsenal were disappointing and, despite dominating possession and having 12 shots on goal, never looked like seriously testing Leicester goalkeeper Kasper Schmeichel as they slipped to a first home league defeat of 2020.
Arsenal manager Arteta criticised the decision to disallow Alexandre Lacazette’s header for offside in the first half.
“I’m really disappointed. We had it in our hands in the first half and I don’t know how the hell the goal was disallowed.
“They caught us with space at the back and in that moment we lost the game.”
He had only 11 touches after replacing Dennis Praet, but still scored the winner and was only denied a second by the head of Bernd Leno as he raced through on goal late on.
Leicester lined up with no forward at all in his absence, with winger Harvey Barnes nominally playing up front, and their lack of cutting edge meant James Maddison had all four of their efforts, all from outside the area, before number nine Vardy came on.
Their improvement was as marked as it was predictable with Vardy on the field, and it was no surprise when they grabbed the lead.
Youri Tielemans’ excellent pass over the top freed Under, and he squared for the free Vardy to score with a stooping header.
There is no more clinical player in the Premier League. Vardy has scored six goals from just nine shots this season – 20 fewer than Liverpool’s Mohamed Salah and one fewer than the champions’ full-back Trent Alexander-Arnold.
Last season Leicester capitulated from a position which seemed certain to deliver Champions League football, when they were 14 points ahead of Manchester United at the start of February. Could they seal the deal this time around?
Predictable Gunners firing blanks
Arsenal thought they had scored in the opening minutes when Lacazette headed in from a corner, but Granit Xhaka and Pierre-Emerick Aubameyang were both offside.
From that point Arsenal controlled the game for the most part, but, despite Kieran Tierney raiding with intent down the left, they struggled to bust open the organised visitors.
Arsenal had 11 shots in the first half but Schmeichel’s only save of note came from the one effort after the break, pushing out a decent volley from Hector Bellerin.
Aubameyang, who has now gone five Premier League games without a goal for the first time, was largely anonymous.
Thomas Partey made a much-vaunted full league debut in midfield but was not alone in failing to shine as Arsenal moved the ball painfully slowly at times.
They have scored only eight goals in six league games this season. They have managed fewer at this stage in one of the previous 20 campaigns, when they scored five goals in 2015-16.
28th time lucky – the stats
Leicester picked up their first win at Arsenal since September 1973, ending a run of 27 games in all competitions.
This was Leicester’s fourth victory in the Premier League this season, their joint-highest after six games of a top-flight campaign, having also won four of their opening six in 2000-01.
Arsenal striker Pierre-Emerick Aubameyang has gone five league matches without a goal for the first time since November 2014, while playing for Borussia Dortmund.
Bukayo Saka made his 50th appearance for Arsenal, with 31 of those coming in the 38 games the Gunners have played under Mikel Arteta.
Player of the match
Squad number9Player nameVardy
Squad number19Player nameÜnder
Squad number3Player nameFofana
Squad number6Player nameEvans
Squad number1Player nameSchmeichel
Squad number24Player nameMendy
Squad number8Player nameTielemans
Squad number10Player nameMaddison
Squad number27Player nameCastagne
Squad number28Player nameFuchs
Squad number15Player nameBarnes
Squad number11Player nameAlbrighton
Squad number2Player nameJustin
Squad number26Player namePraet
23David LuizSubstituted forMustafiat 49′minutes
6dos Santos Magalhães
34XhakaBooked at 90mins
2BellerínBooked at 30mins
3TierneySubstituted forNketiahat 81′minutes
9LacazetteBooked at 57mins
7SakaSubstituted forPépéat 65′minutes
3FofanaBooked at 52mins
6EvansBooked at 74mins
28FuchsBooked at 32mins
8TielemansBooked at 41mins
26PraetSubstituted forVardyat 60′minutes
10MaddisonBooked at 67minsSubstituted forAlbrightonat 85′minutes
15BarnesSubstituted forÜnderat 75′minutes
Match ends, Arsenal 0, Leicester City 1.
Second Half ends, Arsenal 0, Leicester City 1.
Granit Xhaka (Arsenal) is shown the yellow card for a bad foul.
Foul by Granit Xhaka (Arsenal).
Cengiz Ünder (Leicester City) wins a free kick on the right wing.
Corner, Arsenal. Conceded by Timothy Castagne.
Corner, Leicester City. Conceded by Bernd Leno.
Attempt saved. Jamie Vardy (Leicester City) right footed shot from a difficult angle on the left is saved in the centre of the goal. Assisted by Marc Albrighton.
Foul by Eddie Nketiah (Arsenal).
Wesley Fofana (Leicester City) wins a free kick in the defensive half.
Foul by Thomas Partey (Arsenal).
Jamie Vardy (Leicester City) wins a free kick on the left wing.
Foul by Shkodran Mustafi (Arsenal).
Youri Tielemans (Leicester City) wins a free kick in the defensive half.
Substitution, Leicester City. Marc Albrighton replaces James Maddison.
Foul by Eddie Nketiah (Arsenal).
Youri Tielemans (Leicester City) wins a free kick in the defensive half.
Substitution, Arsenal. Eddie Nketiah replaces Kieran Tierney.
Goal! Arsenal 0, Leicester City 1. Jamie Vardy (Leicester City) header from the centre of the box to the centre of the goal. Assisted by Cengiz Ünder.
90+2 mins: Chance for a Leicester second! Vardy is played in behind Mustafi, to the left of goal, and he runs in, waits for Leno to commit himself, Leno refuses to commit himself, and Vardy eventually has to shoot anyway and lifts it into the goalkeeper’s head, from where it bounces to safety!
Arsenal are ripped to shreds! Tielemens hits an excellent high pass over Xhaka, who was snoozing a bit, for Under, who runs into the area and half-volleys a cross for Vardy, on the edge of the six-yard box, to head into an empty net!
75 mins: Cengiz Under comes on, replacing Barnes. “Sorry you missed the end of Groundhog Day,” writes Niall Mullen. “*SPOILER ALERT* It turns out the secret to spiritual fulfilment is kindness and the ability to be present. Anyway, as I haven’t forked out for the PPV, I’ve had the time to put together a Bill Murray football XI:
Broken Tim Flowers
The Life Aquatic With Steve Zizou
Brian Lyttle Shop of Horrors
Fantastic Ruel Fox
Moonrise Kingdominic Solanke
The Darjeeling Limiteddy Sheringham
Groundhog Damian Duff”
Excellent idea. Um, Bas Dost in Translation? El [Grand Budapest Ho]Tel?
74 mins: A long Leicester move ends with Tielemans and Lacazette on the floor in pain and Evans in the book, apparently for being the only one of three players attempting to win the same header to walk away from it.
61 mins: Remarkable scenes! The ball breaks free on the Leicester left. Bellerin commits and slides in, Justin gets there first, prods the ball away and goes down over Bellerin’s leg. It is as fouly a foul as you’re ever likely to see, and quite possibly a second booking for the Arsenal full-back. The referee, for some reason, waves play on!
48 mins: Gabriel gives the ball away, and for a moment Praet has an opportunity to play in Maddison. He doesn’t take it, and both Leicester players react with frustration. Meanwhile, David Luiz goes down as he tries to get back into position, presumably with some kind of muscular something.
Both sides will be looking for an improvement in the second half, as indeed will neutrals. On the plus side, one of the great benefits of this whole work-from-home business is that I can pop downstairs at the interval and get a glass of wine.
THE FORTUNES of financial centres may swing less wildly than the markets they host, but swing they do. In the 2000s London threatened to knock New York off its perch as the world’s top financial centre. Michael Bloomberg, then mayor of the Big Apple, commissioned McKinsey to study how his city could repulse the attack in 2007. Today things look different. Brexit has robbed the City of London, the capital’s financial district, of much of its swagger. World-conquering ambition has given way to anxious defensiveness.
When the post-Brexit transition period ends and Britain leaves the single market on December 31st, financial links with the EU will become, in the words of its new financial-services chief, Mairead McGuinness, “less fluid”. That is putting it mildly. British-registered financial firms will lose the “passporting” rights that have long allowed them to sell funds, debt, advice or insurance to clients across the EU unimpeded, as if they were domestic. Thousands of jobs and well over £1trn ($1.3trn) of assets have already been shifted to continental Europe as City firms confront this new friction.
Brexiteers argue that a City cut free from the EU’s red tape can be a more outward-looking entrepot, with strengthened links to the rest of the world. For now, though, the headlines are all about what London is set to lose. Covid-19 has only added to the anxiety in the City. “It’s a ghost town, just like it is between Christmas and new year but without the drunks,” laments a banker.
This jolt comes after two decades during which London became the increasingly muscular heart of the EU’s financial body. Banks are natural consolidators, and many sought to do as much of their European business as possible from London. An analyst recalls an American banker saying, of his European operations, “If it’s not bolted to the floor we move it to London”.
As a result, London became the overwhelmingly dominant EU hub in international finance (see chart 1), and Britain a big net exporter of financial services, with a £44bn surplus in 2017. The sector’s share of GDP has grown, despite slipping back a bit after the financial crisis of 2007-09 (see chart 2). This activity is a big generator of tax revenue: financial-services firms pay around £75bn a year, or more than 10% of all tax receipts.
It might seem odd, then, that since the Brexit vote in 2016 governments have not considered the City a priority. But its support for Remain did not endear it to the Brexiteers who now run Britain—and who know that there are more votes in protecting fishermen than moneymen. Financial services are not part of the trade deal being negotiated with Brussels. Ministers took the view that the City is “big and smart enough to look after itself”, says Miles Celic, chief executive of TheCityUK, an advocacy group.
As a result, any deal on financial services is likely to be “very thin, a sort of ‘No Deal Plus’”, says William Wright of New Financial, a think-tank. That is what most financial firms and their regulators have long assumed would be the outcome. Much work has gone into minimising disruption, from the 16m insurance policies that Brits have with EU-based providers to the £76trn-worth of over-the-counter derivatives contracts between British and EU counterparties. This should ensure there is “no drama” on January 1st even if there is no deal, says a British regulator. “It will be more a broken-arm than broken-neck cliff edge. Some market disruption, perhaps, but not a financial-stability event.”
Britain was quick to grant EU financial firms access on existing terms for three years, after which they can seek longer-term “authorisation”. This was not reciprocated. With passporting gone, the best that British firms can hope for in the EU is “equivalence”—a poor substitute. This would allow British firms to serve EU clients only if Brussels deemed British regulations to be closely aligned with its own. Moreover, the access is limited and revocable at 30 days’ notice.
Worse, the EU seems minded to offer relatively unfettered access only in areas where not doing so could affect its own financial stability, such as critical market infrastructure. It has thus agreed to extend current arrangements for clearing euro-denominated derivatives, an activity dominated by London-based clearing houses. But even here the extension is only for 18 months, after which it will be reviewed. The EU is determined to build its own clearing capacity to reduce “excessive” reliance on British financial plumbing—though, as Sir Douglas Flint, chairman of Standard Life Aberdeen, a British fund manager, points out, how the 27 countries would share the risks of backstopping it remains to be seen. Tellingly, the London Clearing House’s (LCH’s) share of euro-swaps clearing has remained above 90% since the Brexit referendum, despite efforts by Eurex, a Frankfurt rival, to nab market share.
For many other activities, the level of access starting on January 1st remains unresolved. That is not least because the EU is using equivalence as a bargaining chip in the trade talks. European regulators are yet to decide, for instance, whether EU investors will be able to trade EU-listed stocks on British exchanges. The London Stock Exchange (LSE) says it will offer trading of EU-listed shares on the Dutch trading platform it owns if necessary.
In several key areas, equivalence has been all but ruled out. One is investment-banking sales and trading—bad news for the Wall Street giants that have long used London as a beachhead from which to serve wholesale clients across Europe. Another is retail banking. Some EU countries have already told British banks they won’t be able to serve customers there, forcing the closure of accounts.
Fund managers have another worry, related to “delegation”, the outsourcing model at the heart of the €18trn European fund industry. Thousands of funds are domiciled in places like Luxembourg or Dublin for tax or regulatory reasons, but are permitted to be managed from London, New York or Hong Kong. The EU’s markets authority recently cast doubt on this arrangement, suggesting it may be reviewed. This has caused consternation in Britain—whose fund managers oversee £8.5trn of assets, £2.1trn of which sit in EU-domiciled funds—and elsewhere. “Asset management is just as critical [as banks] to the City’s long-term future,” says Bernie Mensah, president of International at Bank of America. “If you can prise much of that industry away from London then you really start to tip the balance of power.”
The jobs toll
Brussels has always been clear what Brexit would mean if Britain left the single market: if you want to serve EU clients, as a rule it should be done from within the bloc. Its motives are complex. Playing tough is partly to do with deterring others from leaving the EU. It is also about regaining “economic sovereignty”. Some EU regulators worry about the implications for financial stability of having to rely on a third country for critical functions. Others see Brexit as a chance to renew the push for “capital-markets union”, a long-stalled project to deepen and integrate the EU’s fragmented markets, thereby lowering the cost of capital. And there is raw opportunism. “It does seem to me that some in the EU are seeking to weaponise the equivalence decisions for the UK as a third country in order to shift trading volumes in particular into the EU27,” says Kay Swinburne, vice-chair of financial services at KPMG’s British arm, and a former MEP.
EU regulators have made it clear that they want to see “substance” in EU subsidiaries. Banks are under pressure to move not just back-office staff but salespeople, traders and risk managers too. “Keeping the key staff in London, with a brass-plate operation across the water, is out,” says a British regulator. In response, banks have been moving employees in substantial numbers, albeit not the tens of thousands that City Cassandras predicted would migrate. According to EY’s Brexit Tracker, which monitors announcements by large banks and other financial firms, as of October 1st at least 7,500 jobs had left the City for the EU since the referendum. On top of this, firms have added, or plan to, over 2,800 new roles in EU subsidiaries.
These lost jobs add up to around 4% of the total in the City—hardly a devastating blow. But the actual number moving is higher; EY tracks only the 222 largest firms. And there is more to come. Some firms have been waiting to see the outcome of the trade talks before moving more staff. “We will see skeletal teams in the EU being fleshed out over coming months,” says John Liver of EY. With covid-19 complicating relocation, EU regulators have indicated that banks can finish transferring staff next year, as long as their intentions are clear. Hubertus Väth of Frankfurt Main Finance, the city’s financial cheerleader, says that in 2019 some 1,500 finance jobs moved from London to Germany’s financial capital. He expects another 2,000 to transfer as the pandemic fades.
Mr Wright estimates that around 90% of the big Wall Street banks’ European staff were based in London before Brexit, and expects the number to have fallen to 80% by the time the dust settles. Morgan Stanley is reportedly looking for a new London HQ with at least 600,000 square feet, down from its current 800,000. How much of the reduction is down to covid-induced downsizing and the rise of home working, as opposed to Brexit, is unclear.
As for assets, banks have announced the shifting of £1.2trn-worth, equivalent to 14% of British-based banks’ total assets, in preparation for Brexit; more may have been moved unannounced. Nicolas Véron of Bruegel, a think-tank, reckons that more than 20% of British banking assets could eventually go.
Barclays is transferring £150bn—over 10% of its domestic balance-sheet—to Ireland, making it the largest bank there. JPMorgan Chase is moving €200bn ($237bn), over 7% of its global assets, to Germany. When asked by Bloomberg if 20-25% of the wholesale revenue JPM generates in Britain could end up elsewhere, the bank’s head of Europe, Viswas Raghavan, replied, “You are in that zip code.” Lost business means lost tax revenue: Stephen Jones of UK Finance, a lobby group, told a House of Lords committee in February that of the £37bn-38bn that banks contribute directly and indirectly to the Exchequer, £3bn-5bn is “at risk”.
Estimating the final toll is guesswork. New Financial reckons that a quarter of the City’s business is EU-linked and half of that may have to relocate. A similar lack of clarity hangs over the City’s £55bn-65bn in revenue from other parts of the world. No one knows what proportion of that is routed through London only because of its soon-to-disappear frictionless access to the EU.
The City still has charms
Despite Brexit, London retains several advantages over EU financial centres, from its language and legal system (which governs many financial contracts) to the rich corporate ecosystem of lawyers, accountants, consultants and public-relations experts entwined with the City. London is also—no small matter—the worldliest of the continent’s world cities.
This makes it attractive not just to big banks, but also to hundreds of smaller firms that “see advantages Paris and Frankfurt struggle to reproduce”, says Daniel Pinto, the Anglo-French founder of Stanhope Capital, a boutique investment firm. Paris, he says, is still seen as “wanting to penalise, not promote, the financial sector”, despite its strenuous efforts to woo business from London. Meanwhile, foreign institutional investors, from American endowments to Middle Eastern sovereign-wealth funds, “have an almost cultural attachment to London and will still want to invest through it if they can”. Moreover, London is streets ahead of European rivals in several fast-growing sectors, such as green finance and fintechs. For firms in these domains, “If you want to see 20 investors who are genuinely invested in your area, London is still the place, and we don’t see that changing,” says Mike Reid of Frog Capital, a VC firm that invests in fintechs.
Regulation might also be an advantage in the future. Some worry that standards may be allowed to slip to boost Britain’s competitiveness. The Bank of England rejects this (one of its mantras is “divergence doesn’t necessarily mean dilution”). It stresses a change in style rather than substance: making rules smarter by letting regulators, rather than lawmakers more detached from the industry, craft more of them. Improving on the EU’s one-size-fits-all-27 financial rule book is not the most fiendish of challenges. The aim is to rewrite it so it is “more open to innovation while no less attentive to financial stability”, says a British official, citing clunky European rules for small banks and the constraints of the Solvency 2 insurance directive as areas to work on. Ms Swinburne expects Britain to seek to align regulation more closely with America and Asia.
The EU, meanwhile, suffers from a lack of cohesion. The huge variation in its member states’ tax and insolvency laws is a formidable barrier to creating a unified capital market, for instance. The bloc is also riven with division over what type of financial sovereignty it wants. “It’s a delicate balancing act. The more it wraps its arms around EU borders and says activity has to take place within them, the less competitive and less connected to global flows its financial services will be, and costs will rise,” says Andrew Pilgrim of EY. Even America, the financial hegemon, has never sought to gain full control of its financial flows and currency.
Also hamstringing the EU is a lack of co-ordination in taking on London. Its financial centres compete with each other. When Paris hustles to lure asset managers, for instance, it looks to poach from Luxembourg and Dublin as well as London. “There’s no one place where they [the EU] are amassing their efforts,” says Eva Kingston, a financial headhunter. As a result, expertise is diffuse: Frankfurt is strong in banking; Amsterdam in trading platforms; Luxembourg and Dublin in fund administration; Paris comes closest to being an all-rounder but is far from world-class. In a recent global ranking of financial centres it came 18th, just ahead of Washington, DC.
There are also questions over banks’ longer-term commitment to a Britainless EU. They are being forced to relocate business against their will. “Allocating more capital to the euro zone right now feels odd, what with negative interest rates and an undynamic economy,” says a senior City figure. It does not help that the EU27’s share of global banking, insurance and capital-markets activity has been falling since before the global financial crisis: from 20% in 2006 to 13%, while America’s share has remained stable at around 40% and Asia’s has jumped from 18% to 28%. “Anyone for a market that’s relatively small in global terms, shrinking and inefficient?” asks another banker, acerbically.
Some bankers may find ways around the diktat that they serve EU clients from within the bloc. The LCH has suggested that, faced with “forced fragmentation”, some firms might try “to reroute trades via different entities”. A central banker says: “Never underestimate the financial sector’s ability to do the business it wants, where it wants, despite regulators putting lines on maps. Arbitrage is in its DNA.”
Even if London stays well ahead of European wannabes, however, it faces intense competition from elsewhere. It remains locked in a battle with New York for top spot. Asian markets are growing fast and becoming more self-sufficient in raising capital. China has hosted more of the IPO boom of 2020 than London, partly thanks to its fast-growing, Nasdaq-style market for tech stocks. “The big risk for London is not the EU but that in the not too distant future Asia doesn’t need it,” says Mr Wright.
The full impact of Brexit won’t be clear for years. Large parts of the future relationship between the City and the EU will be thrashed out only at the end of temporary extensions, such as that for clearing, says Simon Gleeson of Clifford Chance, a law firm. In the meantime, technology, along with covid-19 and home-working, is making the question of location-based regulation, long fundamental in finance, increasingly vexed. All of which, says Jan Putnis of Slaughter and May, another law firm, “makes Brexit look almost quaint”.■
This article appeared in the Britain section of the print edition under the headline “Brex and the City”
HAVING UPSET pretty much all Boris Johnson’s plans, covid-19 has found a new way to thwart the prime minister: by undermining his strategy for re-election in 2024. Other than getting Brexit done, Mr Johnson’s main policy plank when he was elected was to “level up” impoverished areas of the country far from the capital, and thus consolidate the votes that he won through his support for Brexit. A battle that is now raging between the government and city mayors over local lockdowns could damage the prime minister’s credibility as saviour of the north.
Directly elected mayors are a novelty. Labour began the experiment 20 years ago, as part of its devolution strategy. The Tories adopted the idea, hoping that urbanites who were viscerally opposed to Conservative governments might nevertheless opt for a charismatic local Tory. In typically British fashion, new mayoral arrangements have been laid on top of older ones, producing a mess. Liverpool has a city mayor, a metropolitan mayor and a ceremonial lord mayor, for good measure.
The government gave mayors few formal powers, expecting them to be little more than local cheerleaders and problem-solvers. Their ability to raise money is limited. But mayors have large mandates and high local profiles, which give them great informal power. Boris Johnson is prime minister because he won 92,000 votes in a Tory leadership election and then, last December, 25,000 votes in his constituency. By contrast, 360,000 people in Greater Manchester voted for Andy Burnham. Almost 1.2m Londoners voted for Sadiq Khan.
As the government moved from a nationwide lockdown to targeted local ones, it tried to treat mayors mostly as mouthpieces for its policies. Steve Rotheram, Liverpool’s metropolitan mayor, says he found out that his city would be placed into the highest level of lockdown by reading the Times. Sir Peter Soulsby, the mayor of Leicester, says he learned of changes to the rules in his city by studying government news releases: “We were never warned in advance, and never asked for our opinion.” Then the government tried to tighten the lockdown in Greater Manchester, and Mr Burnham dug in.
He had already demonstrated his informal power. In May, he and the city mayor of Liverpool argued against reopening schools. Although mayors are not supposed to control schools, this had a huge effect. In early June only 6% of schools in north-west England were open for children in the reception year, compared with 41% in the Midlands. Mr Burnham dished out more opinions. People in the north-west, he said, were being treated as “canaries in the coalmine for an experimental regional lockdown strategy”. In mid-October a poll by YouGov showed that people in northern England trusted him to handle coronavirus more than they trusted Mr Johnson or Sir Keir Starmer, the Labour Party leader.
Mr Burnham argued that if the government wanted to tighten the lockdown in Manchester, it should shell out more generously to cover the economic damage the city would suffer. After more than a week of negotiations, on October 20th the government refused his demands and went ahead without his approval. The two sides were just £5m ($6.5m) apart.
Still, it is striking that a man holding an office that did not even exist four years ago has made the government negotiate with him, almost as though he were a foreign leader. Mr Burnham and some of the other mayors are beginning to acquire national clout. “I think it represents the coming of age of the metro mayors,” says Lord Kerslake, a former civil-service chief who now chairs the UK2070 Commission, an inquiry into regional inequality. He thinks that more power and funding ought to flow to them eventually.
Covid-19 has exposed the failings of Britain’s centralised state, which is coping with the virus less well than countries with stronger local public-health systems such as Germany and South Korea. But the centre does not give up power easily. A white paper on devolution has been put off. And shortly after slapping down Mr Burnham, Mr Johnson picked a new fight with Mr Khan, over London’s transport system.■
Editor’s note: Some of our covid-19 coverage is free for readers of The Economist Today, our daily newsletter. For more stories and our pandemic tracker, see our hub
This article appeared in the Britain section of the print edition under the headline “Our friends in the north”
POVALIKHINO, Russia — With election day looming, Nikolai Loktev was in a panic: The mayor of a tiny village of log houses, wood-burning stoves and rutted dirt roads 300 miles east of Moscow, he was running for re-election unopposed.
In a Western democracy, this would not necessarily set off alarms; it might even be welcomed. But in Russia, where elections are rigged and the ruling United Russia party virtually always wins, the bedrock political principle is to create the illusion of democratic choice.
For that, Mr. Loktev needed an opponent.
But it was proving difficult to find one in the village. He had already asked a number of Povalikhino’s residents, including his assistant at city hall and a member of the Communist Party who had run and lost in elections in 2011, but both declined.
When he finally found who he thought was a willing patsy in the person of one Marina Udgodskaya, who cleans city hall, he thought his troubles were over.
But then she won.
Nobody was more surprised than Ms. Udgodskaya, who did not campaign and who said she had agreed to run in the election last month only to help her boss.
“He just needed somebody else, anybody at all, so the election could take place,” Ms. Udgodskaya said.
At first, she said, she was “worried and confused” when the results rolled in, but she is now quite clearly warming to the idea of the mayoralty. “You shouldn’t expect anything in an election,” she said.
She agreed to be sworn in, more than doubling her salary to 29,000 rubles, or about $380 a month, and settled into the mayor’s office in city hall before isolating at home last week because of a coronavirus scare.
As a first order of business — after finding her replacement as cleaner, that is — she plans to bring streetlights to the village, she said, something that people have long been asking for.
The goings-on in Povalikhino precipitated a Russian media frenzy, focusing predictably on the farcical nature of it all. But by illuminating the essential cynicism that is gnawing away at democracy around the world, the election of Ms. Udgodskaya served a more serious purpose.
Apart from in a few Arab monarchies and the remaining Communist dictatorships in places like North Korea, democratic elections are the only method in almost all the world today for legitimizing political power.
That’s why Russia, a number of other former Soviet states and a growing number of countries practice so-called managed democracy, where elections take place on schedule, like clockwork, but the incumbent virtually never loses.
To achieve this, the police squelch real political opposition, and election commissions bump promising candidates off the ballot with technicalities — such as an electoral ban in Russia against the opposition leader Aleksei A. Navalny, who was also incapacitated with poison before this year’s local elections.
These repressive measures have proven to be effective — sometimes too effective. The problem then becomes finding supposed opponents to play the role of losers, to keep up the facade of democratic process.
In Russia, Vladimir V. Putin has won the presidency three times against the same hapless candidate, Gennady Zyuganov, a humorless man with a droning, wooden voice conveniently put forward by the Communist Party. In 2018, Mr. Putin ran against a lineup that included his reputed goddaughter, Ksenia Sobchak, who of course also lost.
In Turkmenistan, the president once ran against his minister of water resources. In Kazakhstan in 2011, a candidate running against the president endorsed the president.
“I didn’t want to become president because that is not possible,” the Kazakh presidential candidate, Mels Yeleusizov, said in an unusually candid interview at the time of his role as a fig leaf of democratic process.
Andrei Kolesnikov, a political analyst with the Moscow Carnegie Center, said that in Russia, political advisers to the Kremlin keep a close eye on national and local politics, scouting for talent for both pro-government candidates and for those who can plausibly and safely play the role of losers.
“This is one of the instruments of legitimizing elections in Russia,” Mr. Kolesnikov said in a telephone interview of fielding weak opponents. “They look like elections without being real elections.”
The system does occasionally cough up the wrong result. In the Siberian region of Khabarovsk, an opposition candidate won the governorship and was later arrested, touching off months of protests. “In small communities, such breakdowns can happen,” Mr. Kolesnikov said.
That, of course, is what happened in Povalikhino.
Irina Nechayeva, the mayor’s assistant, said it wasn’t so much the assumed hopelessness of running against Mr. Loktev that turned off most people but, in fact, the remote possibility of winning.
“You have to listen to everybody’s point of view,” Ms. Ivanova said of the mayor’s role, “and in Russia, there as many opinions as there are people.”
Ms. Udgodskaya, 35, lives with her husband, a day laborer, and two teenage children in a cozy, if weather beaten, house, raising chickens, ducks, rabbits and geese in the backyard. In an interview, she said she was never interested in politics and had no idea whether her story reflected any larger issues. “I like farming,” she said.
In Povalikhino, logging trucks rumble through town, sending up splashes of dirty water from potholes on the main street. To get around, the residents navigate a maze of wooden walkways to stay above the swampy ground, passing garden plots and cow pastures.
Tatyana Murzina, a clerk in the village store, said Ms. Udgodskaya stood a chance only because the village is small enough that people knew her personally and liked her. “Everything was clear to us,” Ms. Murzina said.
Vladimir Yeltsov, 62, a retired trucker, said he voted for Ms. Udgodskaya, “though I pity her,” because the village budget never has enough to fix the roads. The former mayor, Mr. Loktev, actually did a good job repairing water mains, he said, but was such an introvert he rarely talked to people. “He didn’t show he cared,” Mr. Yeltsov said.
Mr. Loktev declined to be interviewed. Tamara Lokteva, his wife, said in an interview outside their tidy blue house that the loss was a “very painful topic.”
Ms. Lokteva said that her husband never really wanted to be mayor and never clung to power. He now blames her for encouraging him to run twice, and for the way things turned out. “He always says, ‘You got me into this.’”
After months of shutdowns affecting business, live sport, tourism and the arts, Melbourne’s next lord mayor will have a crucial role in helping the Victorian capital to restore its reputation as a cultural and events hub.
Melbourne’s Lord Mayor will be formally declared by mid next-month after council elections
Key stakeholders say the mayor will play a crucial role in reviving the city
An ‘inclusive’ leadership style is needed, a political expert says
Nine political hopefuls are vying for the position in the current council elections, along with the $200,000 salary that comes with it.
Postal ballot voting closes on Friday, and the electoral commission will formally declare a winner by mid-November.
Incumbent Lord Mayor Sally Capp is running again and faces competition from her deputy, Arron Wood, Greens candidate Apsara Sabaratnam, Labor-linked Phil Reed and Jennifer Yang, Victorian Socialists’ Kath Larkin, nightclub boss Nick Russian, pollster Roy Morgan, and Wayne Tseng of Team Zorin.
Monash University political expert Paul Strangio said the successful candidate would face “extraordinary” challenges, but noted he or she would be one of many community leaders shouldering the burden of the COVID-19 recovery.
He said building relationships with the State Government, other councillors, the business community and ratepayers would be key for the lord mayor.
“It’s going to demand an enormous work ethic and plenty of resilience to fulfil that role in this acute and difficult time,” Associate Professor Strangio said.
While political alignments to parties in power at the state and federal level could be useful, Associate Professor Strangio said such links were not ultimately necessary for the candidate to succeed.
Business in ‘diabolical shape’
A brief look at Melbourne City Council’s pedestrian data provides a snapshot of the CBD’s empty streets.
On October 15, 9,507 pedestrians were counted by the council’s monitoring devices from 5:00pm to 6:00pm. Exactly 12 months earlier, the figure in the same timeframe was above 87,000.
Paul Guerra, the chief executive of the Victorian Chamber of Commerce and Industry, said restaurants and retailers were in “diabolical shape” and he feared many would not last until Christmas.
He hoped the successful candidate would have strong business and leadership credentials.
“It’s really important, particularly at this period of time, that the leadership of the city of Melbourne can set a strong example for the rest of the state,” Mr Guerra said.
In the short-term, Mr Guerra hoped the lord mayor-elect would advocate for people to return to the city’s retailers if they were still working from home.
Arts sector hopes for summer revival
Claire Spencer describes Melbourne’s artistic community as “resilient” but concedes 2020 has been a year of devastation for the industry.
Ms Spencer, the chief executive of Arts Centre Melbourne, said more than 1,000 performances had been cancelled this year due to COVID-19.
“There are many people in the industry who don’t have permanent work and have been caught out with JobKeeper and JobSeeker and are doing it very tough,” she said.
Like Mr Guerra, Ms Spencer believes the next lord mayor will need to project an air of confidence to bring people back to the CBD.
She is positive the city’s once-thriving cultural calendar will return to its busy best, but how long that will take remains uncertain.
Ms Spencer hoped the centre would receive financial backing from the council and State Government for small modifications to the Sidney Myer Music Bowl, to make it safe for crowds to attend outdoor performances this summer and maintain social distancing.
She said the centre hoped to hold “big Australian contemporary music concerts, right through to smaller community performances”.
“We think it would be a really beautiful gift to Melbourne.”
Will Melbourne’s homeless ‘crisis’ return?
The Salvation Army’s Major Brendan Nottle hopes the lord mayor-elect can champion the cause for rough sleepers in the city, an issue he describes as a worsening “crisis”.
Since the pandemic, a majority of Melbourne’s homeless people have been able to stay in subsidised, hotel-style emergency accommodation.
Major Nottle said there had been a “lot of new faces” seeking support at the organisation’s CBD night cafe on Bourke Street during the Stage 4 lockdown.
“Those new faces are often made up of international students or people on temporary work visas. They’re people who aren’t eligible for JobKeeper or JobSeeker. These people find themselves in really desperate situations,” he said.
Major Nottle said the City of Melbourne had been “excellent” in trying to tackle the problem of homelessness, and hoped the elected mayor would continue to advocate for the vulnerable.
Villa, who were on the back foot in the opening half, came forward with more purpose after the beak and went close in the 51st minute when central defender Ezri Konsa headed inches wide.
When the match appeared to be heading for a goalless stalemate, Barkley made sure Villa started the season with four league wins for the first time since 1930 after they narrowly avoided relegation from the top flight last season.
Hammers spoil Bale’s welcome home party
Earlier, West Ham staged an astonishing comeback against Tottenham, scoring three goals in the final 10 minutes to draw 3-3.
In the day’s other games, Brighton scored a deflected 90th-minute equaliser to draw 1-1 at Crystal Palace and Sheffield United and Fulham shared the spoils, also one apiece.
Spurs were on track for an easy win after Son Heung-Min scored once and Harry Kane twice within the first 16 minutes, with the highlight expected to be Gareth Bale’s return to Tottenham after seven years in Madrid. West Ham’s determination and poor play by Spurs changed all that.
Welshman Bale, on loan from Real Madrid, came off the bench in the 71st minute, but instead of a glorious introduction, West Ham ripped up the script with a stupendous fight back.
Fabian Balbuena’s 82nd minute header and Davinson Sanchez’s own goal gave West Ham hope. Bale almost scored his side’s fourth, but West Ham’s Manuel Lanzini struck a wonder-goal deep in stoppage time to earn his side an unlikely point.
Draw for Brighton and Crystal Palace
At Selhurst Park, Argentine substitute Alexis Mac Allister’s shot from the edge of the area ricocheted off Palace defender Gary Cahill and into the corner of the net as Brighton’s pressure finally got its reward.
Brighton centreback Lewis Dunk was handed a straight red card in the third minute of stoppage time for a crude, two-footed lunge on Cahill in a penalty area melee, but Palace had no time to take advantage of its numerical advantage.
Indeed, the home side ended the game having had just one shot – and that was the contentiously awarded penalty converted by Wilfried Zaha in the 19th minute.
Palace striker Michy Batshuayi had his jersey pulled by Tariq Lamptey in the area – although contact appeared minimal – and Zaha stepped up to send goalkeeper Mathew Ryan the wrong way from the spot for his fourth goal of the season.
Brighton picked up only their fourth point of the season, having lost three of its first four games. Palace has seven points.
Fulham and Sheffield United draw
It was Fulham who took the lead in the 77th minute through Ademola Lookman, but United kept up the pressure and levelled the tie in the 85th from the penalty spot through Billy Sharp.
“Disappointed not to take all three points,” Fulham boss Scott Parker told reporters. “To get your noses in front with 10 to go you should see the game out. It wasn’t meant to be but there are some real positives.
“We had a lot of pace in the team and we caused United a lot of problems. We should have scored a second.”
The Blades had numerous opportunities to score in the first half and their best chance came when Oli McBurnie connected with a cross at the edge of the six-yard box, only to see Alphonse Areola make a fantastic reflex save.
The home side thought they had taken the lead minutes later when Sander Berge’s cross was deflected into Fulham’s net by Tosin Adarabioyo but the goal was chalked off for an offside in the buildup.
Fulham had a golden opportunity to take the lead in the second from the penalty spot when Jack Robinson was found to have handled the ball in the area. But Aleksandar Mitrovic thumped the ball onto the crossbar and over.
The visitors went ahead when Lookman dribbled past two defenders before smashing the ball past goalkeeper Aaron Ramsdale for his first Premier League goal.
However, the Blades won a penalty following a VAR review after Mitrovic kicked Robinson while competing for a high ball, and substitute Sharp made no mistake to beat Areola in the Fulham goal.
Mitrovic nearly settled the contest in stoppage time when he rose above the United defence to get to Lookman’s cross, but his header sailed inches wide of the near post.
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