Hybrid working did not reduce economic divides, research finds

Pandemic failed to cause ‘death of the city’, but nor has it reduced geographical inequalities, a think tank has said

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Remote working has not led to a reduction in the UK’s geographical economic divides, a report by the Resolution Foundation has found.

The think tank’s Right Where You Left Me? report found that while the regional employment gap has reduced, the wholesale move to remote working caused by the pandemic has not helped to level out regional inequality.

It said London was the “epicentre of the big shift towards remote working”, with prosperous areas including Richmond-upon-Thames and Bromley, as well as further afield in Rochford, Essex, among those that saw a net increase in workers – gaining more resident remote workers than they lost office workers.

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Consumer spending also increased the most in these already prosperous areas, suggesting that the economic gap between different areas may have widened due to remote working.

In contrast, the areas that lost the most workers as a result of the shift to remote working included Reading, Crawley and Dartford, as well as some of the more deprived areas of London. These areas also saw the biggest fall in consumer spending.

Lalitha Try, researcher at the Resolution Foundation, said that despite many commentators heralding the work from home revolution as the ‘death of the city’, the pandemic has not had a major impact on the UK’s economic geography.

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“As Britain finally emerges from the pandemic, the early signs are that the Covid-19 crisis has failed to scar Britain’s economic geography.” she said. “But, nor has it soothed the big spatial inequalities that beset pre-pandemic Britain.

“With many deprived parts of outer London struggling, and the WFH revolution mainly benefitting already prosperous areas, Britain’s big economic divides are as entrenched as ever” said Try.

“This makes the task of ‘levelling up’ the country all the more challenging, and all the more pressing.”

The report said unemployment has fallen to a 40-year low, with vacancies outnumbering unemployment for the first time since records began, and strong jobs growth in traditionally low-employment areas of the UK helping to close the UK’s regional employment gap.

However, the report said there was still regional variation in unemployment, with nine of the top 10 local authorities experiencing the biggest rise in unemployment being in London.