The UK economy could lose almost half a trillion pounds of output if workers fail to return to their offices, a study estimates.
Douglas McWilliams, a former chief economic adviser to the Confederation of British Industry, has warned the economy will not return to its pre-pandemic size until 2025 if home working continues in its current form, which would add up to at least £480bn in lost activity.
McWilliams said: “‘If we carry on working at home when at least half want to return, we run the risk of turning into a 90% economy with GDP stuck a 10th down off its peak.”
The research, conducted for a client of McWilliams’ consultancy, the Centre for Economics and Business Research (CEBR), comes as one of the UK’s biggest employers plans to permanently close nearly 100 offices..
Capita, the outsourcing group that runs the London congestion charge, confirmed reports that it is preparing to close more than a third of its 250 offices across Britain.
The move will be seen as a huge blow to the government’s efforts to persuade commuters to return to work in their offices, as thousands of businesses rely on bustling urban centres.
Last week one of the best known, the sandwich chain Pret a Manger, added to the worries about how sustained remote working would impact businesses by saying it planned to cut nearly 2,900 jobs following the desertion of high streets.
Meanwhile, many companies have signalled they will continue to allow staff to work from home, an indication that the pandemic has prompted a major shift in the office-based culture that has been a hallmark of City firms for generations.
The accounting firm PricewaterhouseCoopers and the fund manager Schroders are to allow the majority of staff to continue to work from home. NatWest Group – also the owner of Royal Bank of Scotland – has told 49,000 of its 65,000 staff to keep working from home until 2021.
McWilliams added that the damage from a permanent shift to home working would be severe because the economic activity generated by commuting and socialising could not be replicated by people working from home.
However, the CEBR forecast is based on nothing changing with home working, which McWilliams stressed “more likely it will”.