The London Intelligence

The London Intelligence – London Economic Tracker – November 2020

The London Intelligence tells London’s story through data. This report looks at changes to London's labour market and economy since the pandemic began. This issue is produced in association with the Policy Institute and the Centre for Urban Science and Progress, at King’s College London.

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The report is the third produced in association with King’s College London. The previous issue is available to read here.


London, like the rest of the country, experienced some recovery over the summer – but that recovery was weaker in the capital than in the rest of the UK, particularly so for its labour market, with steeper falls in both the number of jobs and new vacancies.

There are specific concerns for inner and outer London. Central London has seen the deepest and most prolonged drop in the consumer economy, but the workers most affected by this loss of economic activity are likely to be living in outer London, where private rents have continued to increase throughout the pandemic.


The Government Response Stringency Index is a composite score developed by researchers at Oxford University, to compare countries’ policy responses to the coronavirus pandemic. Since the start of the pandemic, national lockdown measures have diverged and after a period of relaxation over the summer months, the UK and other European countries have reinstated tighter restrictions to try and prevent the spread of the virus.



London has seen a steeper increase in the number of unemployment-related benefit claimants

In October 2020, the number of people claiming unemployment-related benefits in London was 170 per cent higher than the same period of the previous year amounting to 300,000 new claims. This increase was steeper than across the UK, where claims increased by 120 per cent over the same period. Most of this rise happened during the first lockdown – the claimant count has dropped slightly since – but will likely increase further due to the second lockdown and previous uncertainty on the continuation of the Job Retention Scheme.

The government’s changing response to coronavirus has meant than an increasing number of people on low pay became eligible for unemployment-related benefit support, although still employed. The number of people unemployed in London was 18 per cent higher in August (the most recent data) than the previous year – with the unemployment rate standing at five per cent.

There has been a greater fall in employee numbers in London

The number of employees has declined sharply in recent months, and much more so in London than in the rest of the UK. Early estimates for October 2020 indicate that there were four million payrolled employees, five per cent fewer than the same period of the previous year  a loss of 200,000 jobs.

Early findings from the Labour Force Survey suggest that the number of foreign-born workers has declined particularly sharply across the UK, with the majority departing for overseas. This will have had a significant impact in London, where 35 per cent of foreign-born UK residents lived in 2019.

“The pandemic has led to an astonishing and unprecedented exodus of migrant workers from the UK, with the foreign-born population falling by more than 800,000.  London’s workforce has almost certainly shrunk by hundreds of thousands. It’s perhaps not surprising that workers from abroad, especially those in the hospitality or retail sectors, may have chosen to return to their home country rather than pay London rents.  And during the pandemic and its immediate aftermath this may serve as a useful safety valve for London’s labour market, limiting the rise in unemployment and poverty. However, if they don’t return, labour and skill shortages could prove a significant drag on London’s recovery.” 

Jonathan Portes, Professor of Economics, King’s College London; Senior Fellow, UK in a Changing Europe | @jdportes

Unemployment looks set to rise as job postings remain low

Despite the extension to the furlough scheme to March 2021, unemployment looks set to rise as new job postings remain contracted. Job postings on search website Indeed remain 50 per cent below their pre-virus baseline – with London faring worse than all other UK regions and nations.


London-based businesses are slightly more optimistic about recovery, but office demand has dropped off

The NatWest/IHS Markit PMI measures business activity by surveying companies on output, new orders, employment, and prices; a score above 50 shows an increase in activity from one month to the next. Managers were more confident about recovery over the summer, but the second wave has tempered that optimism as the UK looks set for a double dip recession. Optimism remains slightly higher in London, despite the disproportionate hit on the capital’s economy to date.

The pandemic and recession have caused office demand to drop off in central Londonand an increase in vacancy rates, though vacancy is still lower than it was 10 years ago following the financial crisis. Despite some beginning to return to the office ahead of the latest national lockdown, workers who can work remotely have largely continued to do so and following a period of heightened restrictions, the majority are unlikely to return before the start of next year.

Since March, the take-up of space in central London has slowed as occupiers have paused to assess their options but, as the pandemic has continued, one factor that has become clearer is that the office has a central role in working life and will remain key to occupier’s businesses. Offices will increasingly be seen as a tool for promoting collaboration, agility and innovation and many companies will see the acquisition of new office space as vital to their longer term success. As such the current slowdown isn’t necessarily indicative of a long tern shift in demand for office space in central London. 

Elaine Rossall, Head of UK Offices Research, JLL


Rents in central London have seen a huge drop, but continue to increase in outer London

As well as commercial property, there has been a drop off in demand for private housing in central London – with average rents in Zone 1 falling by 25 per cent compared to last year.

But rents increased strongly further away from the centre, showing there is strong demand for living in London’s suburbs, while central London properties usually let to business travellers and tourists, including through platforms such as Airbnb, may well have increased supply and contributed to the fall in prices in inner London.

The steep increase in outer London rents is concerning given that residents of outer London are also more likely to have lost their job or lost income due to the pandemic.

“The latest data reflects tenants undergoing a lifestyle evaluation. Many tenants have placed more importance on access to green space, private outside space and larger properties, with a bias to zones further out, causing a rental increase in Zones 3 to 6. Rents in Zone 1 have decreased since the start of the pandemic, reflecting those moving out of zone 1 and an influx of corporate and holiday lets returning the market.”

Millie Todd, Senior Analyst, Dataloft UK | @dataloftuk


Trips to workplaces and shops remained subdued even before the latest lockdown

Trips to workplaces, shops and leisure activities stayed consistently 40 per cent below normal, even before the second lockdown.

Londoners have been consistently staying at home for longer than the UK average: so far in November, Londoners have spent 35 per cent more time at home than usual – compared to 25 per cent in the UK – probably as they are more able to work remotely, and this perhaps prevented the worst of the second wave in the capital.

When compared to other global cities, London has also seen a lower proportion of workers return to the office. Since the start of the pandemic, trips to workplaces in London have followed a similar trajectory to New York.

But there was great variation within London. While shopping and recreation trips were suppressed across the capital, reductions were much greater in the city centre. The cities of London and Westminsterand Camden and Islington, saw the largest declines in retail trips between 1 July and 1 November compared to a pre-virus baseline. The lowest declines were all in outer London: Enfield, Waltham Forest and Ealing.

Tube ridership continues to be heavily suppressedeight months into the pandemic, there hasn’t been a single day with tube journeys above 45 per cent of their normal level. Ridership on London buses recovered better, but was still only 60 per cent of normal levels before the second lockdown.

 “Job postings and employee numbers have been falling even further in London than in the UK as a whole,  a worrying trend. Perhaps surprisingly, business confidence is higher in the capital than elsewhere. This may be a ‘lagged effect’ and we will need to see how business confidence develops over the next few months. Alternatively, it may mean that in the economic recovery phase, when it arrives, London will lead the rest of the UK – as was the case after the Global Financial Crisis in 2008-09. Meanwhile, a fairly consistent picture is emerging from the evidence on office occupancy, retail and rental housing which suggests there may be some restructuring of activity and investment to areas outside the centre, although this does not mean that central London will lose its pre-eminent position.”

Mark Kleinman, Professor of Public Policy, King’s College London | @policyatkings

Report highlights