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London post pandemic

Malcolm Bacchus comments on the future of London post pandemic and the many different scenarios.

Malcolm Bacchus August 2021

The future of London post pandemic is a matter of great interest and great debate. Unfortunately there are as many different scenarios as there are pundits willing to debate it. This article seeks to amalgamate some of those views.

There have been many pleas that the opportunity should be taken to “grow back better”, but sociologists will tell you that there is a tendency of the human race to revert prior norms. It takes a cataclysmic event to jolt us permanently from our path.

It looks, in the UK at least, as if some of the effects will be long lasting, particularly in the trend to home or hybrid working and to on-line shopping, although both of those are more the speeding up of existing trends rather than a complete shift of direction. Here, the issue is rather more how London will manage this as its size makes London more vulnerable and less easy to adapt to change than other UK Cities.

For our lifetimes, London has been the powerhouse of U.K. economic growth, leading the country in terms of job creation and prosperity, particularly as a result of its financial institutions and tourism which have grown just as manufacturing has fallen. But this has come at cost and, according to the Office for National Statistics, London has lost more jobs that other cities through the pandemic with 3.2% few pay-rolled employees in June 2021 than in February 2020 - a loss of some 230,000 jobs significantly in in the hospitality sector.

Not all other cities or areas have seen the same, indeed in the north of the country employment is up and the technology sector continues to grow. Some are seeing this as a permanent shift to a cloud-based revival of rural areas; most others feel that, whilst there will be more home working it will be mainly from city suburbs– a spreading out of employment and living rather than a diaspora.

To this we must add the government focus on “levelling up” other regions to spur growth outside the capital and whilst he has said those policies will not hurt the city they may certainly impact its future.

So what can we expect in London?

The tourism industry will continue to feel the pinch. Particularly if there is a real urge to grow back better we might see overseas travel permanently decline which will mean the tourist industry will either need to look more to the UK or will become a lesser component of the London economy. Theatres are already adapting, leading the post-pandemic world in streaming to a world-wide audience.

With hybrid working we should see a re-emergence of local living which might revitalise some highstreets. The trend to on-line shopping may falter, but is here to stay and with the emphasis on less car use expect the decline of the Bluewater type experience and large shopping malls.

The biggest unknown is the return to the office. Nobody is expecting it to go back to exactly what it was but the level of change is unknown. A recent Deloitte’s survey showed developers anticipating a 10% to 15% in workspace requirements in the City of London. Much of the existing office space may need to be adapted for co-working or for lower cost business space but much is likely to be unsuitable and the same survey showed that new construction starts actually jumped by 20% in the six months to March 2021.

Existing office space will be adapted to become homes where possible – although again much of the existing older office stock built in the 1970s and 80s is unsuitable for this. Croydon and the City are two areas where conversion is already being actively considered which may reduce the demand for new build homes elsewhere and, indeed, the need to commute.

In all of this, the roll out of new infrastructure is critical. 5G networks and broadband become essential and they are by no means universal across London as yet. Public transport too will need to change if we are to grow back better – and there will be a real challenge in trying to provide better connected, faster, and more convenient public transport whilst revenues are hammered by reduced commuter traffic through hybrid working. Housing stock will need to be rethought as well - many properties currently being built are simply too small to accommodate a family and home-working at the same time.

Finally, we may see London shrink. The GLA's August 2020 survey, showed that 17% of Londoners wished to move out of London, held back only by financial uncertainty, the cost of moving and the location of work. As on-line work increases, financial uncertainty diminishes and the levelling up of other cities gets underway, will the reduction in COVID risk entice them to stay, or will they move? Certainly moving to the country provides a less crowded, less expensive life but it also misses the cultural and social vibrancy, the bars, restaurants and museums that London provides and the largest pool of talent and jobs in Europe.

Whatever happens, one thing is certain: London will reinvent itself as it always has done before. And probably in ways no pundit has yet foreseen.