London has become the unemployment capital of the UK — a stark example of the toll COVID-19 has taken on the region that drives the highest proportion of GDP in the UK.
London's unemployment rate hit 7.2% in the three months to February 2021, according to new figures released by the Office for National Statistics on Tuesday morning. The capital's jobless rate was the highest in the country.
All regions saw a rise in unemployment but London saw the largest jump, with an increase of 2.7 percentage points. The capital's workforce decreased by 60,000 in just the final 3 months of 2020, the ONS said.
The figures compound worries about a possible collapse in London's economy sparked by COVID. Many fear there could be an exodus from the capital, as people look for cheaper accommodation with more green space amid working from home orders.
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Large-scale moves out of the city would have huge knock-on effects for the businesses that serve inner London — everything from coffee shops and sandwich bars to bank branches and hairdressers.
Catherine McGuiness, policy chair of the City of London Corporation, told Yahoo Finance UK in an interview earlier this year she was "very worried" about these businesses.
"The big financial and professional services firms, or even the small ones, are doing perfectly well working remotely," she said. "It’s the supporting businesses that really rely on footfall that are going to be struggling. People are going to face enormous challenges."
London is home to a high proportion of people working in shutdown sectors such as hospitality and retail. ONS figures showed that London has the highest proportion of service-based jobs, at 92.2%.
Last year Confederation for British Industry (CBI) chief Carolyn Fairbairn warned that city centres like London could become a "ghost town" as a result of the pandemic.
"Some of our busiest city centres resemble ghost towns, missing the usual bustle of passing trade," she wrote in the Daily Mail. "This comes at a high price for local businesses, jobs and communities."
Although the government has gone to great lengths to roll out job support schemes for hard-hit sectors, many businesses have still been forced to close or make cuts.
The data on London's jobless rate was published alongside national figures that showed an unexpected fall in the headline unemployment rate to 4.9%.
Chancellor Rishi Sunak said: “Protecting jobs and the economy has been my main focus since this pandemic began - through the furlough scheme alone we have protected 11.2 million jobs.
“As we progress on our roadmap to recovery I will continue to put people at the heart of the Government's response through our Plan for Jobs - supporting and creating jobs across the country.”
ONS data showed the region with the lowest unemployment was the South East, with just 3.4% of the working population out of work.
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