A major new report published today lays bare the economic impact of the Covid-19 pandemic on Central London – and the prospects of significant recovery saving thousands of jobs as a vaccine is successfully rolled out.
The report, carried out by consultancy Arup for firms in the central area, models the effect of the virus particularly on businesses reliant on “white collar” footfall, including retail, food and drink outlets, hotels and entertainment venues.
Its “worst-case” scenario, with lockdowns continuing through next year, forecasts an £84 billion hit to the central economy and 117,000 jobs put at risk, while an effective vaccine introduced in 2021 would see more office workers at their desks, the economy boosted by between £22 million and £41 billion, and between 31,000 and 57,000 more jobs safeguarded.
A vaccine is nevertheless not a magic bullet, the report says, warning that returning to pre-crisis levels of economic activity will take several years, with working from home for at least part of the week continuing.
Lockdown saw a £2.3 billion hit to the West End, it says, with Londoners quicker to embrace home working from home and more reluctant to go back to the office than their European counterparts.
With businesses enthusiastically adopting technology enabling remote working, and workers themselves embracing working life without long and expensive commutes, a full return to office working is unlikely. “We could be entering a new era where the three-day office week will become the norm. London has to reinvent itself to reach a better new normal,” the report says.
“The realistic prospect of a vaccine for Covid-19 will fill many in the business community with great hope. This research demonstrates why,” said business leader Ruth Duston, who commissioned the research on behalf of Central London’s Business Improvement Districts (BIDs).
“However,” she added, “even with office workers at their desks three days a week by next year, we must remember that occupancy rates will still be significantly lower than they were pre-Covid-19. While of course we may celebrate the prospect of a vaccine limiting further damage to businesses, we encourage the government to now think about what a three-day a week city looks like.”
Plans to get central London back on its feet were needed urgently, for the country as well as for the city, added Alexander Jan, chair of the city’s Midtown BID. “Pre-pandemic, Central London produced nearly 11% of national output, as well as the lion’s share of London’s £39 billion tax surplus, that is spent on public services elsewhere in the country,” he said.
“In the midst of discussions on building back better, levelling-up and sustainability we must not lose sight of the need to get economic growth, competitiveness and employment, up and running in London and the rest of the UK so that we can sustain so many of the vital public services that people all over the country rely on,” added Jan.
The report recommends a range of short-term measures to boost footfall and recovery, from continuing direct financial support for business, including Business Rate and tax relief, to reducing travel costs and introducing flexible season tickets to accommodate partial home working.
Central and city government should also join with business in promoting “safe return” to the West End, for students and tourists as well as office workers, with longer-term measures including investment in active travel and the “public realm”, and remodelling office space for collaboration and interaction rather than sitting at a desk.
Read the Arup report in full here.
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