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18 November 2020updated 09 Sep 2021 12:38pm

Have we reached peak London?

How Covid-19 halted the relentless rise of the capital. 

By Alec Marsh

Even before Britain entered the second wave of Covid-19 and England was locked down again, you might have noticed that something was wrong with London – specifically central London. But you might not. Because to do so you would have had to go into the capital to see it for yourself. And people haven’t been doing that. London has a problem: parts of the capital resemble a highly elaborate architect’s model, except no one in their right minds would design a city like this, not any more.

When I cycled in from the suburbs during the August heatwave, I passed empty or shuttered shops along near-deserted roads. The mighty roundabout of Marble Arch – usually the first great existential test of any cyclist’s will on the way into the West End – was devoid of cars. It felt like a disaster movie. On Oxford Street, Selfridges was untroubled by human traffic and looked faintly ridiculous. At the intersection of Regent Street and Oxford Street – where the Tube station would usually be disgorging commuters and tourists in their hundreds – the stairwells were empty. And when the lights changed something else was wrong: there were huge gaps in the traffic, as if the cars were observing social distancing.

I was in the City before I had my first brush with a white van – after 11 miles. It accelerated past on an empty road, and I realised that heatstroke had become a more pressing danger to cyclists than the traffic. At Bank, I popped into the governor of the Bank of England’s local Pret a Manger to buy a coffee. The manager told me takings were about a quarter of what was normal. Not long after this, Pret announced it was laying off 2,890 workers – a third of its staff – and closing 30 branches.

Things haven’t improved much since then, and the decision to impose a new month-long lockdown from 5 November means that for London – to borrow from Matt Hancock, the Health Secretary – “things will get worse before they get better”. The human absence I observed is confirmed by data the New Statesman has sourced from Apple, which shows that pedestrian movement in London fell more steeply during the first national lockdown than in any other major British city. Moreover, its recovery before the second wave lagged behind too.

One important explanation is that even before Covid reached our shores workers in London were already among the most likely in Britain to be working from home at least some of the time (also true of people in the south-east of England, who often commute into the capital). Then the pandemic hit. In April 57.2 per cent of adults in London were working remotely, compared to 46.6 per cent nationwide. This is in part because the sorts of jobs that are done in London are precisely those that can be done online at home.

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Unsurprisingly, businesses across the capital have suffered the steepest decline in turnover of any region in Britain – with more than one in ten reporting a fall of at least 50 per cent, according to figures obtained by the New Statesman. And now we have a second lockdown – and, before that, the government’s exhortation in September for people to work from home where possible “for at least six months”.

[see also: Why city centres can survive Covid-19]

The question is, what’s going to happen to our great city? Well, first, companies are going to start shedding floorspace. A survey of Royal Institute of Chartered Surveyors (RICS) members showed that 93 per cent envisage businesses reducing office space by up to 20 per cent in the next two years. During the first lockdown, Jes Staley, Barclays CEO, questioned the point of 7,000 members of staff commuting into its Canary Wharf HQ, suggesting that large offices might be “a thing of the past”. “We are going to think about our real estate mix given the lessons we’ve learnt,” he later said.

Over the next year, London’s prime and secondary retail rents are expected to fall by 11 and 16 per cent respectively, and the city’s prime and secondary office rents by 5 and 8 per cent, according to a RICS survey. “The idea that perhaps next spring we’re going to go back to where we were [before Covid hit] is fanciful,” said Simon Rubinsohn, chief economist at RICS. “Some of these shops in central London are not going to reopen. They were probably not going to be open in two years’ time anyway.”

His wager is companies will shed about 10 per cent of their existing office space over the next two years. But I suspect he’s being cautious. Either way, what’s happening is hugely significant, and city life – especially in London – is going to change. “We need to reimagine what central London might look like if it is not so dependent on retail or tourism,” said Rubinsohn, who predicts that many offices will be converted for residential use. “There has to be a recognition that some of the office space isn’t going to be fit for purpose going forward. The price attached to it is probably not what it was.”

How bad will it get for London? “I don’t think we are losing London as we know it,” Rubinsohn said, “but it does need to be reconfigured. This is the opportunity to do more – to make it a different sort of place, because it could be a very appealing place.”


The truth is that cities such as London have lost their raison d’être – namely the monopoly they enjoy on the provision of talent. Many of their workers’ jobs can be done online. And this ties into another important truth about living in London. For the majority of residents, it comes with profound trade-offs. The restaurants, art galleries, museums and access to good, well-paid jobs are all great, but the sky-high costs of housing, the pollution and the interminable commuting times are not.

Don’t forget that Londoners typically spend 74 minutes travelling to work, compared to a national average of 54 minutes. It’s not surprising that if you offer the city’s commuters the chance to work from home, a high proportion will seize the opportunity. “If you look at self-assessment of well-being London is bottom in the whole of Britain,” said Paul Collier, professor of economics and public policy at the Blavatnik School of Government at Oxford and author of The Future of Capitalism. “The only self-assessed psychological indicator where it’s top is anxiety, so on the whole people would rather not be there.”

Which brings to mind Dr Johnson’s aphorism – “When a man is tired of London, he is tired of life.” But what happens to a great city when it grows tired of itself? Because that’s what we might now be seeing.


Ian Goldin, professor of globalisation and development at Oxford University, believes Covid will leave a heavy mark on the British capital. “My own view is that it is likely to change permanently the dynamics of offices and that’s likely to lead to quite a dramatic repricing of office space and residential space,” he told me during a Zoom call. Already there is evidence of this, with London’s usually buoyant housing market underperforming compared to the often less competitive markets in the north of England and Scotland.

Crucially, Goldin said, Covid is interconnecting with another challenge to cities: climate change. Cities such as London, New York and Delhi are on average already 4-5˚C hotter than their surrounding regions. In London, a northerly city in world terms, temperatures can hit 35˚C in summer – considerably warmer than most of the UK. And the heat exacerbates pollution. “The combination of climate change and pollution is making some cities almost unliveable,” warns Goldin, whose book Terra Incognita features “100 maps to survive the next 100 years”.

[see also: London will survive coronavirus, but life and work in my city will be very different in the years ahead]

Yet for all the challenges, Goldin said London will remain the “star city” of Britain. But things will be different. “[Covid] could slow the growth of London. It will lead to the repricing of office space and residential space – I think it’s going to be a big, big shock to the office space sector.”

The technological changes brought about by Covid will accelerate existing trends, such as families moving out of London in search of more space and better housing. “We are likely to see cities becoming younger, and as a result more single accommodation vs family accommodation,” said Goldin, who remains optimistic about London continuing to prosper as a creative hub. Offices will be reconfigured to be primarily places of social engagement and innovation. “There’s quite a lot of evidence that I’m seeing that productivity will suffer if you remove physical contact. People talk about this being extremely efficient – and it is – but efficiency is not the same as long-term productivity, particularly the dynamics of innovation.”


I asked Jim O’Neill, the cross-bench peer and former Goldman Sachs chief economist who advised George Osborne on the Northern Powerhouse, what he thought about the effect of the “Zoom economy” on London. “Could we be finally discovering the way that service sector productivity can improve?” he began, inevitably over Zoom, from his home in Dorset. “Could it be that this crisis has actually brought into reality that you can perform all these service functions at least as well, possibly better, by not spending three hours a day commuting in and out of central London? You’re achieving more in less time, which is the definition of productivity.”

Eighty eight per cent of us who worked remotely during the first lockdown want to continue doing so in some capacity, according to a recent report from Cardiff University and the University of Southampton. This finding is supported by a survey of 2,000 workers for the British Council for Offices (BCO), which found that most white-collar workers want to split their time between home and office working even post-Covid; with 62 per cent of senior executives and 58 per cent of entry-level staff wanting to alternate between the two. “We are never going to go back to how things were before,” said the BCO’s chief executive, Richard Kauntze. So where are we going?

For Paul Collier, the pandemic offers the opportunity for a once-in-a-generation reset of how we live and work – a chance to change both for the better. “A good society has to deliver productivity and liveability and Britain’s got a spatial structure which is not doing either – provincial Britain is not productive and London is not liveable,” he said. “What a bloody mess.”

Collier believes Covid has made a powerful case for devolution in public and private organisations. “Good decision-taking is a combination of the tacit knowledge that comes from experience and the codifiable knowledge that comes from expertise… a good system pushes the codified shareable knowledge down to the level where it can capture the tacit knowledge and still build teams that are cooperatives. That’s the direction which firms will increasingly be going in.”

Jim O’Neill agreed. Because of the crisis, “the opportunity to actually have some success on the geographic part of levelling up is actually probably a lot easier”, he said.

Most would welcome that eventuality, but it does offer a pretty bleak prognosis for London. Coronavirus abruptly brought parts of the capital to a halt and emptied it – arguably more effectively than the Luftwaffe did in the Blitz – but has it also sowed the seeds of its demise as we know it?

Have we reached peak London?

I put this to O’Neill. “The whole Bric concept, came out of 9/11,” he said, in reference to the grouping of the major emerging economies of Brazil, Russia, India and China. “The message below the surface was that this is the end of American-led globalisation. I suspect you’re onto something. In a way you could see a number of signs that London’s peak might have already been. Arguably Brexit is a very bad thing for London, given what it had done for the internationalisation of London. The real estate market had already peaked four years ago, and the rest of the country kind of hadn’t.”

[see also: How the Covid-19 crisis has turned the UK into a “Frankenstate”]

More worryingly, his recent visits to London have crystallised his own fears for the capital. “What my generation, what your generation has grown up on seems to be dead, and the whole presumption [about] what’s driven the world economy in the past 40 years is now actually gone. All over the world – and London epitomises it – 60 per cent of GDP has come from big metro cities. I used to call London the Bric capital of the world [as the city that benefited most from the emerging Bric nations], now it looks like the capital of nothing.”

Nor does O’Neill, who is now chairman of the Chatham House think tank, believe that employees will be rushing back to offices when they are allowed. “Unless you suddenly find everyone saying ‘you know what, this is ridiculous, I want to be back in central London, five days a week’, this could certainly be peak relative London. It might help us further solve one of the great dilemmas of British life these past 40 years – this never-ending house price divide between London and the rest of the country.”

Paul Collier was more strident when asked if we had reached peak London. “Absolutely. But we haven’t reached peak Birmingham, or peak Sheffield, or peak Manchester or peak Bristol.” He mentioned HSBC’s decision in 2017 to move its British HQ to Birmingham. “Britain’s ludicrously overconcentrated in one city, so devolving stuff is kind of a no brainer. We’re not saying London’s had it, but it’s going to be a rebalance.”

Collier felt the need to be upbeat, however. “The future isn’t ‘go to London or go to hell’. Nor is it, ‘go to London and therefore go to hell’. This is a situation in which efficiency and liveability both point in the same direction – and that’s great. We shouldn’t be anxious about this. We should be embracing it.”


Peter Heather of King’s College, London, an authority on the fall of the Roman empire, said that Covid was a catalyst for change for London, Britain and the West. “Great empires have an inbuilt tendency to generate their own demise by the transformation that they set loose on the world around them.”

In this context the shift of economic gravity from West to East is an unstoppable fact. “It was obviously not exactly the same, but the same pattern of an empire finding that the economic edge which brought it into being is undermined by its own operation – that worked in the Roman world too,” Heather told me. “Even if you wanted to you can’t go back to that world, because the structural building blocks have shifted, they’re in a different place.”

London was destined to decline with a shift in world patterns. “People are always banging on about London being too big compared with other British cities but it always seemed to me to be missing the point. London is a very specific epiphenomenon of our civilisation; it is this extraordinary place because of the heritage of empire. That’s why it’s so big.”

[see also: How Covid-19 will reshape our cities]

Just as Rome had to come to terms with its altered position after the loss of its empire, so does London today. “To a very considerable extent London’s position in the global economy is a legacy of empire and there has always been considerable doubt over how long that’s likely to stay. Brexit increases the speed of increasing marginalisation of London,” Heather said.

We can take solace in one major difference between today and fifth-century Rome. Then the world was an agrarian economy; a loss of land meant loss of wealth. Now our industrialised global economy means there is more wealth to go around. “If you manage the process of adjustment well, then other people can become richer without us becoming poorer,” said Heather, for whom the critical lesson for our leaders lies in the acceptance of change. “For everyone’s sake, the job is to make the most effective response to that reality, not to try to pretend it’s not there.”

Similarly we cannot ignore the impact of Covid-19, and the technological revol-ution it has wrought, on London. To do so would be a grave injustice to those most affected – the poorest people in the city. The plight of London’s insecure workers could perhaps be compared to that of the coal miners and their communities a generation ago. It is their jobs (and their huge geographic concentration) that are most vulnerable to the techno-economical forces reshaping the capital. Let us hope that the political leadership in City Hall and central government can respond to the challenge. 

Alec Marsh is the editor-at-large of Spear’s magazine. His latest book is “Enemy of the Raj” (Headline)

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This article appears in the 18 Nov 2020 issue of the New Statesman, Vaccine nation