18 Jul 2021
Some headlines would have you believe that people are leaving London in their droves, leading to a redistribution of businesses across the UK. But is this really the case? We take a closer look at the facts to determine how this shift could impact businesses.
The pandemic has altered the way many businesses operate.
As we emerge from the lockdown restrictions, some are adopting a hybrid model, where employees divide their time between working from home and in the office. Others are remaining 100% remote – at least for the short to medium term.
Consumers have also reassessed their priorities during the lockdown, with many choosing to ditch the capital in favour for a more relaxed, rural and cost-effective lifestyle.
In the absence of physical workspaces, location isn’t as relevant anymore, and you don’t necessarily have to live in the capital in order to access the best or most competitive jobs. So, what does the so-called “mass exodus” from London mean for businesses?
According to research by Hamptons, people leaving London purchased 73,950 homes (worth a collective £27.6bn) in 2020, as the pandemic caused the largest exodus from the capital in four years. This was driven, in part, by desire for more space and the Stamp Duty holiday.
Sevenoaks, Windsor and Maidenhead, and Oxford experienced the largest rise in the share of homes bought by ex-Londoners. For the first time in a decade, the average distance London leavers moved was 40 miles (compared to 28 miles in the first three months of the year).
Unsurprisingly, Zoopla’s fourth, fifth and sixth most common search terms were “detached”, “rural” and “secluded”, as the appetite for rural living rose.
It mostly comes down to the cost of living. London is known for its high house prices: the average house price in London in December 2020 was £496,066 – almost double the UK average of £251,500, according to data from the Land Registry.
As well as mortgages being out of reach for many people, rent is also becoming increasingly expensive. The Evening Standard recently published an article in which Mayor Sadiq Khan warned the average London rent could spiral to almost £30,000 per year by 2025.
Thanks to the widespread adoption of remote working and transport initiatives such as the HS2 rail link, there are far more career opportunities available for those who live outside of the capital now, compared with five years ago.
It’s not just individuals and families who are incentivised by lower costs.
Some businesses are choosing to up sticks and move elsewhere, or opening up additional satellite offices in places like Birmingham, a growing finance and tech hub. Earlier this year, Goldman Sachs announced it was opening an office in Birmingham, which has already attracted the likes of HSBC and Deutsche Bank.
In March 2021, the Government announced a £4.8 billion Levelling Up Fund “to invest in infrastructure that improves everyday life across the UK, including regenerating town centres and high streets, upgrading local transport, and investing in cultural and heritage assets.”
As part of the project, the Government also plans to work with local businesses on the future role of Local Enterprise Partnerships. The aim is to make sure local businesses have representation and support to drive economic recovery at a local level.
The Government will also be decentralising power and working more with regional partners and communities. In fact, it has already announced that close to 3,000 civil service jobs will be relocated out of London and the south-east of England by 2025.
However, while there could well be opportunities for businesses outside of London in the coming months or years, London is still a thriving business hub.
When it comes to tech, for example, London ranks highest for the amount of capital invested. In 2020, it attracted $9.59bn in 2020, according to venture capital firm Atomico’s The State of European Tech report.
And while a growing number of businesses are choosing to leave the capital, London (1.1 million) and the South East (932,000) still had the most private sector businesses in 2020, accounting for 35% of the entire UK business population.
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