Swiss Re Tower - a hubristic warning to Cool Britannia
June 20, 2004
Mark Gilbert
London - City skylines tell tales about economies. Good times nurture the optimism for developers to build ever-taller or more glamorous buildings. All too often those soaring towers are a last hurrah as the party ends.
A new London landmark has often marked a UK economic decline. From the Post Office Tower in the 1960s to the NatWest Tower in the 1980s and the Canary Wharf Tower in the 1990s, each was the tallest London building in its day, and each coincided with or heralded a slump.
Britain may well be on the verge of another bust, if the vertiginous prices in the housing market prove unsustainable.
London has a new skyscraper, courtesy of Swiss Re's new 40-storey steel-and-glass tower. It's not the tallest on London's skyline, where archaic planning rules have capped the ambitions of architects, but it is the funkiest.
The UK is in its 48th consecutive quarter of gross domestic product growth, its longest streak without a contraction for more than 200 years. The housing market, however, looks increasingly like a bubble about to burst.
UK house prices climbed at their fastest rate in one and a half years in the three months to April, according to the Royal Institution of Chartered Surveyors. In the three months to May, price growth slowed for the first time in six months.
"One of the risks to the UK economy is a sharp correction in consumer spending, which could be created by a downturn in the housing market," Bank of England governor Mervyn King, who is doing his best to deflate the bubble with four rate increases since November, said this week.
The Swiss Re Tower, dubbed the Erotic Gherkin by locals for its resemblance to a tumescent pickled cucumber, is wider in the middle than at its base or top. At 180m tall, it's a gleaming testament to Cool Britannia - and possibly a hubristic warning.
Canary Wharf Tower, the Swiss Re building's predecessor in the history of London landmarks, was born in 1990 to a similar housing market backdrop. At 250m high with 50 floors, Britain's tallest building dominates London's eastern vista.
In the five years before the tower's completion, the economy grew in every quarter except one. UK house prices increased by an average of 1 percent a month, according to an index compiled by HBOS, Britain's biggest mortgage lender, rising by 3 percent a month or more for much of 1988 and peaking with a gain of 4.3 percent in July of that year.
Once Canary Wharf was completed, the economy shrank in five of the next eight quarters. Average quarterly growth from 1990 to 1995 was 0.4 percent, half the economic performance achieved in the previous half decade.
The housing market stumbled, posting an average monthly decline of 0.2 percent for five years, which drove many householders into negative equity, - owing more on their mortgage than their homes were worth.
Unemployment soared from 5.3 percent in early 1990 to almost 10 percent by late 1992.
Previously, London's tallest building was the NatWest Tower, at 183m. National Westminster Bank, now part of Royal Bank of Scotland Group, opened the City of London's first skyscraper in the early 1980s.
In the five preceding years, the UK had avoided recession, or two consecutive quarters of contraction. While the economy posted one quarter of shrinkage in every year except 1978, it managed an average growth rate of 0.6 percent.
The NatWest Tower's opening coincided with a slump. The economy contracted for five consecutive quarters from the beginning of 1980. Its average growth rate in the first five years of the 1980s was just 0.3 percent. Unemployment, which had hovered around 4 percent or less since the end of 1975, shot up to 6 percent during 1980, and climbed steadily in the next five years to reach 10.4 percent by the end of 1985.
It's now renamed Tower 42. If you look to the west from the aptly named Vertigo bar on the top floor, you can see the Post Office Tower, the previous record holder.
At 177m, excluding a 12.2m aerial, the Post Office Tower started beaming radio and television signals in 1964.
The Labour Party had won the election; Harold Wilson was prime minister. In 1967, the government was forced to devalue the pound to $2.40 from $2.80. It borrowed from the International Monetary Fund in return for scrutiny of its economic pledges, according to The British Economy Since 1945 by Alec Cairncross.
The economy's average quarterly growth rate between 1960 and 1965 was 0.8 percent; it dropped to 0.5 percent in the two years following the tower's opening, and was 0.7 percent in the five years through 1970.
A cartoon in the Daily Telegraph this week featured an estate agent covering his head with his hands and advising his client to "assume the crash position". UK growth slowed in the first quarter for the first time in a year.
The shimmering spiral of the Swiss Re Tower is already under threat as London's most bewitching edifice. Architect Renzo Piano has secured planning consent to build his Shard of Glass on the site of London Bridge Station, south of the Thames River. At 304.8m, it'll dwarf the existing structures around it - provided a crashing economy doesn't kill the plan. - Bloomberg
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