Long-term risk to London’s economy from reduced office interactions

A poll of office workers in London by the thinktank Centre for Cities found they are spending on average 2.3 days a week in the workplace, or 59% of the time they would have been in the office prior to the pandemic. The thinktank’s report, entitled Office Politics: London and the Rise of Home Working, warns that, despite the upfront benefits for staff in terms of better work-life balance and less commuting, there may be longer-term costs for the capital in terms of lost productivity. “Policymakers should be wary that we don’t passively let a public health emergency turn into a longer-term negative impact on the economy,” said Andrew Carter, chief executive of Centre for Cities. The report referred to more than a century’s worth of academic research about the economic benefits of face-to-face collaboration, or so-called “agglomeration” effects, observing that these “would suggest that there will be a long-term productivity hit” from reduced office activity.  “The big risk here is that hybrid working sees a further deterioration in productivity growth off the back of a poor performance over the previous decade-and-a-half, at a time when the London economy needs to move in the opposite direction,” the report said.