What are the future business prospects of cities like London?
COVID-19 caused mass migration from many major cities around the globe. Justin Small examines the figures for London and what they might predict for the future.
Cities like London have always been famous for attracting people, capital and enterprises. Yet in the year since COVID-19 hit, with the critical mass of employees working from home in lockdown, how we view our cities has changed.
And the importance of inner-city living has been reconsidered. Now, for the first time since 1988, London’s population is in decline, as many city-dwellers have migrated back to family homes and rural regions, swapping small city flats and lofty rents for larger family homes with more space.
COVID-19 has generated a mass exodus within the capital, with data from Future Strategy Club revealing that more than 2m Londoners have now left the city. But exactly who has left the city?
The exit of almost half of London’s Millennials and Gen Zs drastically changes the prospects of cities like London. With fewer young people comes significant economic, societal and cultural deficiencies. And 700,000 foreign workers have now left the capital after bearing the brunt of Brexit and COVID’s economic impact.
During the pandemic, migrant workers have been at a significantly higher risk of job loss due to being disproportionately likely to be employed within the hospitality or service sectors. Both of which have seen a large number of job cuts and closures.
Post-pandemic, city centres and service businesses will rely on the steady flow of office workers to survive. If hybrid working takes hold, this will not be possible
Due to this, many non-UK born workers have been unable to afford to remain within London. This concerning surge in return migration is detrimental for London, as with fewer migrant workers comes both skill and labour shortages within the construction, care and hospitality sectors, all of which are essential in our economic recovery post-pandemic.
Their exit also reverses years of government efforts to encourage foreign workers to the city.
But, it is highly likely that most young people will return to London as restrictions begin to ease and the vaccine rollout continues. In fact, 57% of 18-24 years olds are concerned about their future career prospects if they do not return soon.
The return of migrant workers however is less clear-cut, with many community groups predicting they may never return. Migrant workers are not only essential to London's workforce, but its culture too. As an international city, the UK Government must encourage their return.
One new development over the past year that looks to transform the prospects for cities such as London permanently is hybrid working. Hybrid working enables more flexibility and freedom for employees, with many companies today deciding whether to implement it permanently.
Yet hybrid working is a double-edged sword for cities. Not only has it divided opinion within the financial sector, with banking giants such as Goldman Sachs refusing to embrace hybrid employment, it also has the potential to leave London at a further economic loss.
Post-pandemic, city centres and service businesses will rely on the steady flow of office workers to survive. If hybrid working takes hold, this will not be possible, and 86,000 retail and hospitality jobs will be lost. This will leave London's economy £36bn smaller in 2031, and at an even greater loss.
The only thing that we can have some certainty of is that COVID-19 has had, and will continue to have, long-standing effects on the economic, social and cultural infrastructure of main cities around the world. The net benefits/losses to individuals and corporations, however, will only become clear over time.
About the author
Justin Small is founder of Future Strategy Club
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