Already hit hard by Covid-19, London’s economy could see a huge knock-on effect from people continuing to work from home after lockdown.
The widespread shift towards homeworking as a result of coronavirus has “sucked the life out of many central locations”, according to Pablo Shah, a senior economist at the Centre for Economics and Business Research (Cebr).
Google mobility data shows that at the peak of the lockdown in April, the number of people going to places of work on weekdays in London was 77% lower than before the crisis. More people were going out to work by June, but numbers remained around 60% lower than the benchmark period of 3 January – 6 February.
Based on the Google data and the average spending by employees near their workplaces of £202 per month — including lunch, after-work drinks, coffee/tea, snacks, stationery and other office equipment — Cebr calculates that the pandemic resulted in £2.3bn of spending in shops and food/drink establishments near London employment hubs being lost or displaced between March and June.
The economics consultancy has estimated previously that when the ‘new normal’ emerges in 2021 it is likely that 30% of employees in London will still be working at home on any one day, compared with only 11.9% of employees before the crisis.
“Scaling from this, the capital will continue to lose out on around £178m per month compared to what was previously spent by employees near their places of work,” Shah said.
And if employees and businesses are driven away by London ceasing to be “fun”, the effect on the capital’s GDP could be many times more, he concluded.