UK city centres could lose $4 billion due to Covid restrictions

Working from home trend likely to be a permanent change, study says

Commuters make their way over London Bridge towards the City of London. Bloomberg

Britain's city centres could lose billions next year as long-term behavioural changes caused by the coronavirus pandemic continue to hit the hospitality and retail industries.

Research by the University of Sheffield found that businesses could lose £3 billion ($4bn) as people work from home and stop going to coffee shops, buying lunch, or going shopping near their workplaces.

Dr Jesse Matheson, who led the study, said that employees will be working roughly one day a week more at home than they were before the pandemic, with the shift in working habits expected to be permanent.

The phenomenon, which Dr Matheson labelled “zoomshock”, is mainly likely to affect businesses in the most densely populated areas of Britain.

London is expected to be worst hit, with the City financial district expected to suffer a 31 per cent drop in spending, followed by central Birmingham, which could to see an 8 per cent decline.

The study also found that roughly 77,000 people who work in the hospitality and retail industries will be forced to either relocate to jobs in the suburbs or lose their jobs completely.

On Wednesday, England introduced Plan B Covid-19 measures, with workers asked to work from home if they can, leading to fears of further losses for struggling inner-city retailers.

Analysis also found a significant inequality between rich and poor neighbourhoods. Those from more affluent boroughs are likely to continue to work from home, meaning that money being lost in city centres is more likely to be recuperated in higher income suburbs.

“Some of this spending will be realised in the residential areas where these workers live, but some may be lost altogether,” Dr Jesse Matheson said. “As suburban neighbourhoods lack the density of city centres, many retail and hospitality businesses will find it is not profitable to relocate.”

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“Workers in retail and hospitality may also find that demand has shifted to locations to which commuting is too difficult, which means that supply may not be able to keep up with demand.”

Dr Matheson says there is work to do in finding out if all of the lost £3 billion will be spent elsewhere or lost altogether.

“This money may be recuperated in the higher income suburbs, but in a lot of places working from home means people are more spread out, which isn’t good business for retail business like coffee shops, who require high density areas for business.

“So there is a risk this revenue could be lost from the hospitality and retail sectors forever.”