More than a year since the Covid furlough scheme ended, most urban areas appear to have bounced back to pre-pandemic employment levels – with just a couple of exceptions.
During the Covid-19 pandemic, all cities saw a drop in employment as the UK economy grinded to a halt. This particularly affected high-performing places, such as London and Cambridge, which had large working populations before March 2020. Likewise, productive cities like Aberdeen, Crawley, and Slough also suffered a hit to employment, due to the nature of their volatile oil, gas, and airline industries.
But what has happened to employment in these cities since the pandemic?
After reaching their lowest employment levels in Spring of 2021, Figure 1 shows that 7 of the 10 worst hit cities had recovered their employment levels by September 2022. In fact, many even have employment well above pre-pandemic levels.
Figure 1: Most cities now have employment above pre-Covid levels
Source: ONS Pay As You Earn employment data.
The only two urban areas that have not yet reached pre-Covid levels, Crawley and Swindon, are still close – both are less than one per cent below February 2020 employment.
In Crawley, this may be down to the airline industry being hit particularly hard by Covid restrictions. During the pandemic, Crawley’s outlook was relatively dark and uncertain. Close to Gatwick Airport and consequentially reliant on the airline industry, it went from being one of the UK’s most successful cities to having the highest Covid furlough scheme uptake in the country. When furlough ended in September 2021, 7.4 per cent of Crawley’s residents were still claiming from the scheme -the highest rate of all cities and large towns. Thankfully, despite fears over how long it would take for international travel to recover, Crawley and the other airport towns have bounced back relatively quickly as the airline industry currently experiences a surge in demand and record profits.
Swindon’s story is slightly different. Its employment never quite reached the lows of cities like Crawley, Aberdeen, York, and Slough but in July 2021, Honda closed its plant in Swindon after 26 years, leading to a loss of 3,000 jobs. Over the last year, Swindon’s employment has levelled-off at 98 to 99 per cent of pre-Covid employment. The question now is whether its hit will last longer than the rest of the country.
At the beginning of the pandemic, the forecast for the UK labour market was murky. There were questions about the long-term impact of Covid on the economy and whether furlough would be enough to support employment in the long run. Yet now, more than a year after it ended, it seems the scheme was enough to shelter vulnerable areas from the worst impacts of the pandemic, and thankfully these places have since bounced back. That is certainly good news for places like Crawley and ensures one less problem for a national government that is looking to cut spending in next week’s Autumn Statement. Covid does not seem to have led to long-term levelling down; now the question is: what will the Chancellor do about levelling up?
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