As Londoners come to terms with the impact of the recession, their New York counterparts are taking steps to diversify their own city’s economy and revive industries that languished during Wall Street’s recent boom.

Design divas such as Diane von Fürstenberg and Nanette Lepore are teaming up with workers and manufacturers in the fashion trade to rescue New York’s midtown Garment District, once the city’s biggest employer.

It is one of a series of initiatives the city has taken to try to combat job losses in the downturn and find alternatives to its dependence on the financial sector. The administration of mayor Michael Bloomberg, facing a $4bn (£2.4bn) deficit in the coming year, has also found funding for the first of a number of planned small business “incubators” that opened this year. The mayor’s economic opportunity plan aims to encourage the arts and media, bio-science, environmental projects and tourism, including a marketing and tourism agreement to boost travel between New York City and London.

But it is the garment industry that has been the particular focus of attention as campaigners have sought to persuade Mr Bloomberg and the government to support a “Made in New York” revival. Faced with an industry in decline, the city failed to enforce 20-year-old zoning rules that had protected its central Manhattan enclave.

The result is that parts of the square mile south of Times Square have been gobbled up for new hotels, offices and up-market condominiums.

Small garment and accessory makers, hit by higher rents and cheap foreign competition, have been forced out of the area and most of them out of business.

A Save the Garment Center campaign held its first rally in October to protest against Mr Bloomberg’s plans to relocate what is left of the industry into a designated building and to open the rest of the district to the highest bidders.

Ms Lepore, a leader of the campaign, says the idea would spell the end of the historic district in an industry where proximity between designers and suppliers is vital.

Christine Quinn, New York City’s Democratic speaker, said at the rally: “We cannot base New York City’s entire economy on two industries: Wall Street and real estate.” She told Women’s Wear Daily: “We need a diversified economy in New York City, so when there is a Wall Street setback, it doesn’t become a massive problem in our city.”

When the fate of the district emerged as a local campaign issue in New York’s mayoral election last month, the mayor announced a “Project Runway” contest to find a dozen new designers to occupy a city-funded fashion incubator.

Boris Johnson, the New York-born London mayor, was in the city this autumn during New York Fashion week as part of the UK end of efforts to boost marketing and tourism between the two cities.

But fashion industry sceptics say it will take more than a single incubator to revive an industry that once employed hundreds of thousands.

Copyright The Financial Times Limited 2018. All rights reserved.

Comments have not been enabled for this article.