How will home working affect the UK economy?

UK businesses could suffer from a lack of creativity due to colleagues not being able to interact in the workplace during the Covid-19 crisis, the Bank of England’s chief economist has warned.

Covid-19 has had a dramatic on the way we work, with many people forced to work from home for the first time. Shortly after the UK first went into lockdown, the Office for National Statistics (ONS) found that almost half (46.6%) of people in employment were doing some work at home, and of those 86.0% did so as a result of the coronavirus pandemic.

And while this brings potential benefits for employees (such as no commute) and employers (such as the opportunity to reduce overheads), there are downsides when people are no longer mixing together in the workplace, Andy Haldane said.

In a speech at the recent Engaging Business Summit, Haldane acknowledged that virtual meetings “can be an efficient way of getting things done, indeed often more effective than the physical” but he argued that informal chats at work are often more useful than formal meetings.

The chief economist added: “Whether it is creative sparks being dampened, existing social capital being depleted or new social capital being lost, these are real costs and costs which would be expected to grow, silently but steadily, over time. They weigh on the other side of the ledger when it comes to assessing the case for home-working. They cast doubt on whether it will lead to the promised land of improved productivity and greater happiness.”

Haldane concluded that businesses need to find the right balance between what distracts employees and what fires their imagination.

“For me, the 0-5 model of homeworking strikes this balance in the wrong place, as with hindsight did my pre-pandemic 5-0 model.”