When the film director Danny Boyle unveiled his opening ceremony for London’s 2012 Olympic Games before an international audience, he also confirmed what had become one of the world’s worst-kept secrets. The fast-moving, politically charged and eclectic show, full of resonance, humour and ambition, made it clear to television viewers everywhere that London was ready to cement its reputation as the cultural capital of the world.

Not every part of the global audience appreciated every one of the ceremony’s references, but that was part of its charm. This was not a dumbed-down affair, playing to the lowest common denominator. It was a properly cultural event, conceived and performed with bite and vivacity.

The ceremony marked the climax of a period, starting roughly at the turn of the millennium, that has put London at the forefront of world culture. The UK capital’s ability to mix traditional and popular art forms deftly is unique.

There are only two reasons to applaud British culture, a snooty Frenchwoman once told me: Shakespeare and The Beatles. Well, they are not a bad starting point. But she was on to something. In recognising those giants of high and popular culture respectively, she was acknowledging that the British arts scene was uniquely able to blend those two spheres with fruitful results. London in the 21st century is the embodiment of that alchemical spirit.

The capital’s traditional strengths have been internationally recognised for decades: its museums and galleries (including three of the world’s top 10 by visitor numbers), given democratic lustre by their free-admission policies; its West End theatre scene, which attracts mollycoddled Hollywood stars to arduous and modestly salaried terms of engagement, and combines mainstream excellence with a spirit of genuine experiment; and outstanding opera and dance companies.

In popular art forms, too, London is an acknowledged leader. By coincidence, last year also marked the 50th anniversaries of two extraordinary British pop-culture phenomena: the first James Bond film, and the first Beatles album.

The Bond franchise is still massive – the latest instalment, Skyfall, is the world’s seventh-highest-grossing film ever – while the country’s most popular knight of the realm, Sir Paul McCartney, is still pressing the chords of “Hey Jude” at his piano, and still gets the world to sing along to its chorus. British pop, from Adele to Coldplay, is still a world beater.

What London has managed to do is combine the traditional and the popular elements of its culture in ways that could not have been foreseen even a couple of decades ago. For example, the Young British Artists movement of the 1990s, angry, irreverent and radical, might have fizzled out in the way that its punk music predecessors did in the late 1970s. Instead, it helped provide the impetus for the building of Tate Modern.

The gallery, which holds a collection of modern and contemporary art that is far from the world’s best, has nevertheless become a space that combines cultural experiment – its unmissable Turbine Hall installations – with popular appeal. One by one, Britain’s temples of high culture have turned to street or popular performers to freshen their allure, in particular to young people.

Last year, the Royal Opera House in Covent Garden commissioned DJ Mark Ronson to compose and perform in one of the Royal Ballet’s always-stimulating triple bills. The sculptor Antony Gormley, in his major exhibition at the Hayward Gallery in 2007, placed ominous human forms on buildings all around the gallery, wanting his art to “bleed”, as he once told me, into the streets. In 2011, the British Museum gave a whole show to Grayson Perry, a cross-dressing artist who was once considered dangerously outré, but who produced an exhibition, The Tomb of the Unknown Craftsman, that was intellectually thrilling.

London’s cultural institutions are able to programme with audacity, thanks to the mixed funding model that is the envy of most of the world.

New York may have greater private patronage, the great European capitals may boast more supportive governments, but by combining these two sources of finance, private and public, London’s cultural leaders are able to be more supple and more imaginative than their overseas competitors.

At present, they are dealing with cuts in central and local government grants, but they have been able, at least partly, to offset those with private money. Individual donations are increasing, while companies seem as willing as ever to identify themselves with cultural events, hoping that some of their glamour and spirit of innovation will rub off.

Money is attracted to London’s cultural vibrancy. The Frieze Art Fair, full of the kind of art that used to attract the derision of the tabloid press, has become one of the capital’s premier happenings. What has become known as “Frieze week” fills London’s most exclusive hotels and restaurants like no other event in the city. Contemporary art works attract dizzying prices. The Young British Artists are not so angry any more. Their leading light, Damien Hirst, is a multimillionaire.

London’s cultural supremacy is now openly acknowledged by would-be rivals. “In short,” summed up one article in New York magazine, “New York is cardiganed Woody Allen, and London is party-dressed Lily Allen.”

Culturally speaking, Paris feels sleepy by comparison; newcomers such as Shanghai and Rio de Janeiro are full of energy but lack gravitas.

The mayor of London’s World Cities Culture Report last year attempted to sum up what made the capital’s cultural offerings so special. It was, it said, because the city was “more free, more tolerant, more relaxed about difference, more accepting of failure”.

Danny Boyle’s mischievous and occasionally anarchic ceremony of last summer reflected all of those qualities. London never stood prouder.

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