Suburbs Lead Recovery in The UK As More And More People Work from Home

Summary

• Fewer office workers coming to offices is leading to slower than expected recovery in cities like London and Manchester
• Suburban areas like Southall and East Ham have already reported an upturn in terms of consumer spending on clothing and hospitality surpassing January 2020 levels
• Work from home arrangements is being sighted as the primary reason for the disparity in recovery levels, as most large organisations in the country report at least two-thirds of their employees not returning to offices

Credit card spending patterns of people living in and around London has revealed that the businesses in the suburban areas of London are recovering faster than the businesses in the city. Majority of the consumer spending on food, clothing and hospitality is going to businesses which are in residential neighbourhoods than for businesses which are located in prime business areas. Since the outbreak of the pandemic and the subsequent imposition of the lockdown, most companies have progressively migrated their employees to work from their homes. Even after the lockdown was eased, not many of them have proactively tried to bring back their staff to their offices on account of the continuing threat of the pandemic. This shifting of consumer spending behaviour has come as a boon for business in suburban residential areas like Southall and East Ham, where businesses are seeing growth levels that surpassed the January 2020 growth figures. It is worth noting here, that even people living in cities like London have been increasingly showing interest in moving out of the city in the wake of the pandemic, for safety and a better quality of life.

The disparity in economic recovery in London and its suburbs

People who are not travelling to work at their offices in London are spending more time in their local neighbourhoods. Most of the local, as well as international tourists, are also avoiding city areas for the heightened risk of catching the infection there. As a result, most of the businesses in there are witnessing a very slow state of recovery. Premium locations in London; Bromley, Stratford, Orpington and Ealing have witnessed transaction levels in July that were a third of what they were in the month of January while the restaurant transaction levels were 17 per cent higher in Mid-July compared to January in Southall and clothing spending was 10 per cent high in East Ham during the period compared to January. Credit card spending data of Mastercard for the month of July has revealed that retail spend in central London was down by 60 per cent , restaurant spending was down by 80 per cent while workplace-related travel was down by 50 per cent by the first week of August. People perception regarding their future, livelihoods and quality of life has undergone a transformation since the arrival of the pandemic, which is evident from these above witnessed changes.

Working from home arrangements and how it is transforming the work environment in the UK

The advancement in internet technology has made life easy for everyone; however, its safety angle was emphasised after the outbreak of the pandemic. Working from home arrangement makes it convenient for people to sit in the comforts of their homes, be engaged productively as efficiently and as rewardingly as they would have been working from their offices. This saves them a lot of time and energy that goes into travel while it also gives them ample opportunity to spend quality time with their families. Companies are also finding it convenient as it is saving them a lot on facilities cost while employees are able to devote more time to their work which is saved from travelling. Overall, the net effect of work from the home facility is that the cost of operations for a business organisation has come down significantly both directly as well as indirectly. However, one disadvantage of this arrangement is that it cannot be implemented equally in all industrial sectors. So while areas in a city or country which have a higher concentration of white collared jobs will see a lower attendance level, places, where there are more factories and workshops, will see a larger number of people returning back to work. A similar impact on the perception and livelihoods of people has been brought about by online retailing. People are now able to browse through thousands of merchandises while sitting at one place and not having to spend time and money on travel.

Both of the above, though have been transforming the everyday work and livelihoods for quite some time now, but the pace of transformation that has been witnessed after the outbreak has been disruptive.

The pandemic impact on the general business environment in the country

The outbreak of the coronavirus pandemic in the country and the ensuing lockdown had put a halt on almost all business activity in the country and locked up most of the countrymen in their houses. During the six weeks of lockdown, only those businesses were allowed to function that provided essential services. After the lockdown was opened in the first week of May, businesses which had the least risk of spreading the infection were allowed to open first followed by businesses which posed a considerably greater risk. The government, on its part, issued strict safety guidelines in re-opening businesses for the safety of employer as well as customers who visited those business establishments.

The general public has been worried about their safety since the outbreak. Most people prefer not to travel outside the safety of their houses until it is absolutely necessary. Anyone getting the opportunity to work from home is trying to take full advantage of it and is trying to stay and be safe as long as the general threat levels on the pandemic do not subside. This general threat aversion attitude of the people is preventing much of the recovery process in the country, especially for those businesses which are consumer-facing. In the coming time, when the vaccine is made widely available, people anxiousness are likely to lessen, and they may join back work in greater numbers, consequently increasing the consumer confidence levels in the country.