Working from home more after coronavirus could have a profound impact on the global economy

And if people don’t need to be in the office every day, they may choose to live a distance from their workplace, writes Hamish McRae

Offices brimful of workers could be a thing of the past (iStock)

The world is gradually getting back to work – and to play. The disruption is far from over and the economic numbers will be dreadful for some months to come. The summer holiday season will be a washout. But there will eventually be a recovery and we can start to catch a glimpse of how that might look: how we will live and spend differently, and how we will work and earn differently.

Spending first. There is some new data from the large UK insurance group Legal & General as to how Britons have been spending in May compared with the past. As you might expect the overall spend is massively down, more than 30 per cent. But within this there is a 5 per cent rise in spending in or on the home: groceries, alcohol, entertainment, and hobbies and crafts. The question is how much our habits change in the long term. While we cannot know the answer to that, we can all make our own judgements. In that survey 69 per cent said they would spend more time cooking meals at home.

That would fit in with the cook-at-home services pioneered by Blue Apron in the US, where you get the ingredients and instructions for a week’s meals delivered to your door. For what it is worth the company, which was struggling before the pandemic, is now taking on more staff and its shares have recovered in value.

People also say they will use local shops more. There is a gap between what people say and what they do, but it is plausible that some of the social changes of the past few weeks will stick. Besides, it will be several months before some industries get back to anything like normal – European tourism will have a dreadful summer – so there will be a long time for us to get used to doing things differently.

My guess is that consumption in most advanced economies such as the US and UK will still be down by about 5 per cent overall next summer from where it was in the summer of 2019. It will take until well into 2022, before consumption is back to the peak last year. But the amount spent in or on the home will remain slightly up next year. In other words, some of the social changes that have happened now in the way we spend will stick.

And earning? Here we know even less. The big change of course is home working. The best judgement I have seen comes from Carol Wong, from the commercial estate agents Cushman & Wakefield.

“The office will not go away, but the need of the office space may reduce,” she told CNBC. “People will always need physical space and they always want to meet face to face.”

I think that is right. Offices will become more of a social venue, less of a set of workstations. But – and this is crucial – needing less office space will have a profound impact on city centres across the globe. Let’s say, just as a guess, that the world needs 10 per cent less office space. What happens to those gleaming towers in city centres everywhere? What if it is 20 per cent less? Or more?

Yes, some offices can be converted back into living space. That has been happening for decades. The Independent’s original headquarters on City Road in London was turned into an apartment block in the 1990s. But if people don’t need to be in the office every day, they may choose not to live centrally at all. Those amazing pencil-thin luxury apartment buildings now sprouting up in Manhattan are symbols of wealth and power, akin to the merchant towers of Bologna of the Middle Ages. But if the rich choose to spend more time in their country estates, then centres of cities decline. If people want more space, sprawling agglomerations, such as Los Angeles or Miami/Fort Lauderdale, will be able to cope better than dense ones, such as New York/Jersey City or Paris.

We can only guess at these socio-economic changes now. It may be that when the theatres and restaurants reopen that urban life will recover. Spare office space will become high quality living space. It may be that once this plague is past, our great cities will bounce back, as they mostly did after previous plagues. But we will need less space for offices and more for homes, that is for sure. Maybe that is no bad thing.