£15bn annual hit to GDP through Working From Home

Research from PwC has shown that UK GDP could be hit by £15.3billion every year if pandemic levels of working from home continue.

Employees are already being encouraged to return to offices, but the results of this research are likely only to strengthen those calls.

The figure arises mainly from a reduction in consumption by office workers in the shops, cafes and other facilities in city centres. There is also a strong knock-on contribution from the workers in those locations, whose own income and disposable income will then be affected.

Additionally, the research estimates that there will be a hit to UK GDP through a reduction in ‘clustering of economic activity’ as people stay at home rather than travel and interact. This can be a loss from networking and interactions between people, as well as people taking less well-paid jobs outside of major cities, all of which result in overall lower connectivity between people and firms.

Jonathan Gillham, PwC’s chief economist, said: ‘We’ve seen office and home working pitted against each other in recent months but it’s not as simple as one being more effective than the other.

‘Our research highlights some of the broader economic implications and unintended consequences.

‘While continued working from home could help level up smaller cities and rural areas, it would have a disproportionate impact on lower paid workers in bigger cities.

‘A blend of office and home working is the best way to help cushion our economy as the furlough scheme draws to a close – getting more people back to offices safely is critical. The UK is a services-based economy that’s powered on people coming together face-to-face.’

The research shows that some areas of the country may benefit from increased levels of working from home. It cites areas like Outer London and smaller cities as potentially benefitting. This is outweighed however, but the negative impact on our larger cities such as London, Liverpool, York, Birmingham and Sheffield.

It’s evident that, whilst working from home can work well, there are benefits to working in a shared environment that cannot be replicated via Zoom calls! Trainees and apprentices, as well as newer employees absorb experience and ways of working from those around them, which is invaluable.

Travelling on crowded trains and buses is not only uncomfortable, but could be dangerous in the current situation. Where does an employer stand if they require an employee to return to work, who then falls ill? There are a range of concerns and questions to be answered around bringing staff back, and particularly into city centre offices.

Finding a balance between working from home and safe ways for staff to confidently return to offices, particularly in our city centres, is not an easy challenge. This is likely to be an ongoing issue for the coming months.

You can find out more about the research findings here: https://www.pwc.co.uk/press-room/press-releases/returning-to-the-office-has-the-potential-to-protect-hours-worke.html