Global City of the Year: London

It's shockingly expensive. The roads are jammed with traffic. The subway system's hopeless, and the buses no better. There's a surveillance camera on every other corner, and the sidewalks are strewn with litter. The biggest airport is a joke. The richest residents are fleeing or threatening to; the poorest have been chased out into the suburbs by soaring property prices. And the weather sucks.

Why is somewhere with so much against it such a great place for creatives to live and work? "That's simple -- it's because London's so dynamic," says Christopher Bailey, design director of Burberry, the once-dowdy British raincoat company that has been reinvented as a successful global fashion brand. "Creativity thrives here. It has to do with the people, their attitude, vibrance, and energy. You can work away in your little world and have your moment in the sun. That's very empowering. I've lived and worked in New York, Paris, and Milan, but right now I can't think of another city I'd want to live in more than London."

London has more museums than Paris, more theaters than New York, and more bars, public libraries, and music venues than either. A recent issue of the local edition of Time Out listed 111 plays, 190 exhibitions, 157 comedy events, 293 rock or pop performances, and 195 club nights in a single week. One in every eight Londoners -- more than 550,000 people -- works either in a creative job or in a creative industry. That's more than any field except finance. "London's strength in terms of creativity is its genuine multiculturalism and creative heritage," observes Alasdhair Willis, cofounder and chief executive of the furniture company Established & Sons. "We have a fantastic diversity of talent that thrives in a climate that for a while now has been seen to be successful both creatively and commercially."

It wasn't always so. London has always enjoyed creative highs, but in the same hit-and-miss manner that makes its citizens despair of their national soccer team. The city's creatives were also cursed by the collective belief that they were great at nurturing new ideas but not so hot at commercializing them. The smartest filmmakers decamped to Hollywood, and fashion designers to Paris or Milan. Gifted architects built their masterpieces abroad. Talented artists poured out of London's art schools, only to find few galleries to represent them. Music and publishing fared better, thanks to the happy accident of English (or the American version of it) being the world's most marketable language. Their success also provided a steady stream of work for London's graphic designers. But other disciplines were more fragile. No sooner did one revive, than another seemed to decline. The 1960s was the last decade when London fired on all creative cylinders. Until this one.

What has changed? Well, thanks to a lucky (and coincidental) combination of advances in technology and what were, until recently, a buoyant economy and cheap real estate, every creative sector in London has been on a roll in recent years. Fashion has been energized by a new wave of designers, led by Giles Deacon, Christopher Kane, and Gareth Pugh, who have broken with local tradition by managing to stay solvent for more than a few seasons. Cheering them on is Agyness Deyn, the pixie-cropped blonde in the Armani and Burberry ads, who's also the poster girl of the cool Nu Rave club scene. Music is thriving too, with Amy Winehouse storming the Grammys via video link after U.S. authorities balked at admitting someone with her chemical history. Two out of three international advertising agencies have their European headquarters in London, and a clutch of multinationals -- including Ford, Nissan, Nokia, and Volkswagen -- have opened design centers in the city.

London's once-sleepy contemporary art scene has woken up. The catalyst was the opening in 2000 of Tate Modern, now the world's most visited contemporary art museum. Dozens of commercial galleries have opened since then, including outposts of global powerhouses such as New York's Gagosian and Zurich's Hauser & Wirth. They have found a receptive market among the "non-doms" -- the wealthy foreign bankers, Gulf princelings, and Russian oligarchs, who have made the most of Britain's lax tax laws to turn London into a nouveau super-riche playground. And alpha collectors troop into town every October for the Frieze Art Fair. "When we started, we hadn't counted on London becoming such an important contemporary art market so quickly," says Matthew Slotover, who launched the Frieze fair in 2003 with its codirector, Amanda Sharp. "Two factors have helped us: the growth of international art sales and the growth of London as a fun place where people enjoy doing business. It's astounding how desirable it has become."