ABSTRACT
Copenhagen has developed along the lines described above since the post-war boom petered out around 1970, and has furthermore experienced accelerating job loss from that moment on. Moreover, the oil crisis and the period of stagflation, i.e. inflation and economic stagnation, that followed in combination with a still tighter budget made it clear that it was impossible to continue with the previous model. However, political disagreement and the administrative structure of Greater Copenhagen blocked a broad and lasting solution for years while problems increased in number and intensity. By the early 1980s, the city of Copenhagen was facing a constant and growing budget deficit, which in turn reduced its chances of covering the rising need for public benefits, modernization of its housing stock and key institutions such as hospitals and schools. A few years later the city was technically bankrupt but survived thanks to special grants and ad hoc solutions financed by the state. The causes of this deeply problematic situation are of course manifold and complex, but at least five key factors caused Copenhagen’s urban crisis in the 1970s and 1980s (Andersen and Winther, 2010). First and foremost, the 1973-1974 oil-crisis marked a strong divide in industrial development as a deep crisis led to an almost complete deindustrialization of the city centre. The period that followed produced constant business closures and rising unemployment. Although some growth took place in the service industry it was unable to compensate for this job loss. A second factor enhanced the effects of deindustrialization – suburbanization. In less than 40 years, the city of Copenhagen lost more than a third of its population. This third included young, well-educated families who fled the city centre in favour of the much better housing conditions in suburbia. Third, a great deal of the new service economy was in suburban districts where undeveloped land was available. In the beginning mostly relocating backoffice functions and suburban service activities, but later also company headquarters, changed location from older city offices to new, spacious areas equipped with easy car access and sufficient parking space. This included finance and banking but also a considerable share of business services (Winther, 2007; Hansen and Winther, 2006). A fourth factor that eroded Copenhagen’s position was the housing and property market. This market was characterized by three main features; on the one hand a relatively large stock of old, small dwellings lacking modern facilities, a marked dominance of rental housing (private, municipal or non-profit housing) and third, a strict rental regulation scheme introduced at the outbreak of the Second World War in order to prevent rents from rising sharply due to housing shortages. The effect of this was, on one hand, frozen rents, which in turn stopped owners implementing major housing stock improvements and, on the other hand, a significant incentive to middle class people to leave the city and its poor housing quality (Andersen et al., 2000). Finally, Copenhagen’s local government system has caused major problems for its development; the dominant position of Copenhagen in the Danish urban system led the 1970-municipal reform decision-makers to propose a metropolitan council as a solution to Greater Copenhagen’s coordination and partnership needs. However, the council
proved unable to cope with the substantial challenges that faced it in the years to come, which called for local and regional cooperation (Harding, 1997; Andersen, 2008). Despite several attempts, combined resistance at both local and national level blocked metropolitan government reform. In the end, the government shifted to a solution involving a number of single-purpose quangos (quasi-autonomous non-governmental organizations) and public-private partnerships as vehicles for the most urgent policy fields. Hospital services, public transport, restructuring of the harbour area, the development of the new city annex (called Ørestad) and the construction of a new metro system to serve the central parts of the city. General planning policy in Denmark is strongly articulated as country-wide decentralization and equal development. Partly due to the extensive growth in Greater Copenhagen in the 1950s and 1960s, parliament decided to compensate the provinces with massive public investment in infrastructure and various institutions such as new universities and secondary schools. The same decentralization strategy, labelled ‘spatial Keynesianism’ (Brenner, 2004), was adopted on the regional scale, where attention was focused on the suburban districts and outer urban areas. Both strongly undermined the city’s economy. A window of opportunity came as the overall situation of the city worsened in the 1980s. At the end of that decade a growth coalition consisting of a Conservative government, a Social Democratic opposition and the new lord mayor of Copenhagen together managed to launch a city renewal strategy that pushed all resistance aside (Andersen et al., 2002; Hansen et al., 2001; Andersen and Matthiessen, 1995). This coalition succeeded in transforming a longstanding tradition of welfare policy into a policy promoting economic competitiveness. The worsening employment situation and a growing demand for welfare benefits caused still more financial difficulties, and by the end of the 1980s central government had reacted (Statsministeriet, 1989). Parliamentary debate on Copenhagen and its situation in March 1990 marked the turning point. The previously existing welfare regime in Copenhagen was challenged by the negative status quo and forced to change tack. Central government offered assistance but demanded a radical shift in policy from the city government. Despite strongly articulated resistance, city and central governments agreed to cooperate for a stronger and more financially competitive urban policy. The government declared its will to invest directly in a renewal of the central city and improve its overall position. However the city had to take a positive part in the modernization of its internal structures and organization, just as policies had to be reoriented to match the demands of the market. Although the planned changes have taken several decades to bring to fruition, the transformation of Copenhagen has been thoroughgoing and large scale. The former head of urban planning in the city of Copenhagen, Holger Bisgaard, has claimed that city renewal could rightfully be considered the third great phase in the city’s history, the other two being its foundation and Renaissance expansion in the sixteenth and seventeenth centuries. (Bisgaard, 2010). The key to this remarkable recovery has been a shift to a more business-oriented line at local level and a greater concern with capital by national government.
