London suffered the largest number of job losses of any UK region during the pandemic last year, as the capital continues to feel the weight of a “geographically unequal crisis”, according to the Institute for Fiscal Studies (IFS).
The number of London employees on payrolls dropped 5.5 per cent between February and December last year, according to the IFS — almost double the figure recorded in Scotland, which saw the second-highest number of job losses.
It comes after a slew of high street stalwarts buckled under the weight of the pandemic and caused ripples across the jobs market.
Retail giants Arcadia, Debenhams and Jaeger have all gone bust in the past few months and shuttered their flagship London stores.
Topshop and Miss Selfridge-owner Arcadia, which collapsed in December under the weight of £750m in debts, employed around 13,000 people alone.
Stay at home orders have also had a knock-on effect on cafes, restaurants and supermarkets in London’s business districts, with large swathes of the hospitality sector forced to shutter under current lockdown restrictions.
Calls early on in the pandemic to support local businesses in the City crippled by plummeting footfall appear to have fallen on deaf ears.
The number of empty units in the Square Mile hiked 47 per cent last year as the number of workers and visitors slumped, according to figures from analysts at Local Data Company.
Top London venues have increasingly turned to online crowdfunding to stay afloat during the latest lockdown, as government support schemes near their expiry dates without a firm timeline for easing restrictions.
But the IFS warned job losses could continue to balloon as the furlough scheme unwinds.
The capital had the highest level of furloughed employees at the end of last year, with around 10 per cent of London’s workforce still on furlough in December, compared to eight per cent across the rest of the UK.
The think tank said the pandemic has affected the jobs market across the UK, with every region recording an increase in job losses last year. Northern Ireland was the least-affected region, though it still saw job losses jump almost 1.5 per cent in 2020.
“The number of jobs lost has varied a lot, with London really standing out as having lost a lot of jobs,” said Helen Miller, deputy IFS director.
Speaking in a webinar ahead of chancellor Rishi Sunak’s Budget presentation on 3 March, Miller said: “This has been a geographically unequal crisis but it’s also been unequal in terms of hitting people of different ages differently, those of different assets of education levels or health statuses.”
She added that government support packages including the Coronavirus Business Interruption Loan Scheme (CBILS) likely prevented a mass exodus from cities such as London, but warned that business confidence remained low without a lockdown exit date in sight.
A survey by the Office for National Statistics (ONS) released last month found that 15 per cent of businesses that had not stopped permanently trading had little or no confidence that their business would survive the next three months.
That figure hiked to 53 per cent in the hospitality sector, which has felt the full weight of business closures during lockdown.
“There will be a role for well targeted temporary stimulus at some point,” said Miller. “I wouldn’t expect targeted fiscal stimulus to be a big part of the budget, but the government should stand ready to act.”
It comes after leading London business figures last week told the government that “the worst-case scenario has become a reality for the arts and culture sector”.
In a letter to culture secretary Oliver Dowden, major businesses in London’s hospitality sector said the prediction of “cultural ruin is becoming reality with the third lockdown”.
The letter, signed by business chiefs from the Ritz, Madame Tussauds, Heart of London Business Alliance (Holba) and New West End Company, called for further support for the capital.
They urged Dowden to consider an extension of the VAT cut for arts, cultural and hospitality businesses and an extension of business rates relief until at least March 2022.
A government spokesperson said it was supporting London’s culture through the £1.6bn Culture Recovery Fund, “which is helping to stabilise organisations and protect jobs across the city . . . once we are confident we are in a position to explore possible reopening dates, we will be working with organisers to unlock the barriers they face to restarting.”