‘Covid has not bridged UK’s economic divisions’

A new report from the Resolution Foundation shows that the pandemic has not bridged economic divides across the country, with those areas with industries particularly affected by Covid suffering most and working from home benefiting mainly wealthier areas.

Woman In Mask Holding Sign At Shop Window Closed Due To Covid-19

 

The Covid-19 pandemic and its aftermath has slightly reduced employment and house price gaps across Britain, but hasn’t reduced wider economic divisions, while ethnically diverse areas of outer London are at risk of falling behind, according to new Resolution Foundation report.

Right where you left me examines the economic legacy of the Covid-19 pandemic on different places across the UK, with a particular focus on working patterns, housing costs and consumer demand.

The report notes that while at a national level, unemployment has fallen to a joint 40-year low, some parts of the country – notably areas near airports and outer London – have yet to return to their pre-pandemic health. Nine of the ten local authorities that have experienced the biggest rise in unemployment are in London (the other being Luton).

However, strong jobs growth in traditionally low-employment areas of the UK like the North East have helped to reduce the UK’s regional employment gap, but the weakest jobs growth has taken place in ethnically diverse areas around London with high levels of deprivation.

The report says the working from home revolution that occurred during the pandemic has had a bigger impact on individual workers and firms than on local economies, with much of the change taking place in the same local areas.

The biggest net beneficiaries have tended to be prosperous areas, such as Richmond-upon-Thames, Bromley (Kent), Rochford (Essex) and East Cambridgeshire, with these areas also gaining the most from increased consumer spending.

Right where you left me shows that the pandemic’s impact on the housing market may well turn out to be more lasting than its impact on the labour market.  Between February 2020 and February 2022, house prices have grown twice as fast in villages and small towns as they have in major cities (by 22 and 12 per cent respectively), leading to a slight closing of regional house price gaps.

However, the report says that, with average rents for new tenancies currently growing fastest in London, some of the rebalancing of housing demand that took place during the pandemic may yet unwind over the coming months and years.

The report concludes that, given the scale of the economic crisis unleashed by the Covid-19 pandemic,  there is little evidence of pandemic-scarring in parts of the UK – with the exception of areas near airports and outer London, but adds that the lack of improvement means the task of ‘levelling up’ the country is just as big and even more pressing, in post-pandemic Britain.

Meanwhile, another report from the Resolution Foundation finds that the share of young people who are workless has fallen by over a quarter since the mid-1990s, when it was a major social and economic problem, but this decline is predominantly down to falling inactivity among young women, with inactivity among young men now rising.

The report says falling worklessness among women has been driven primarily by falling rates of young parenthood, as well as an increase in the number of women who choose to combine parenting with work. The number of 18-24-year-old women who were economically inactive due to family care responsibilities fell by 220,000 (almost 80 per cent) between 2006 and 2021.

The rising inactivity in men is mainly due to long-term sickness or disability, which accounts for three-quarters of the rise in inactivity among young men – with mental health a big factor. The Foundation warns that should these recent trends continue, the progress made by young women will be more than offset by rising inactivity, and the number of workless young people will again begin to rise.



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