The six months following the arrival of COVID-19 were turbulent for businesses, employees and the wider UK economy. Almost overnight, established working patterns were disrupted as millions of people left their offices and began working from home.
Public discussion around the pandemic focused heavily on its financial consequences, with concerns about recession, business closures and job losses dominating the headlines. Although the full economic impact could not yet be measured, a report from PricewaterhouseCoopers examined the potential consequences of prolonged home working and the gradual return to the workplace.
Its findings highlighted a complicated picture. Working from home offered considerable benefits for many employees and employers, but a permanent large-scale shift away from offices also risked reducing spending, weakening city-centre economies and affecting hundreds of thousands of jobs.
Before the pandemic, home working was available to only a relatively small proportion of the UK workforce. By April 2020, almost half of all people in employment were completing at least some work from home.
The change was particularly significant across the service sector, which accounted for approximately 80% of UK GDP. In industries such as professional services, nearly four out of five employees were working remotely as offices emptied across the country.
Businesses had to adapt rapidly by introducing new technology, communication systems and management practices. Employees were required to establish working environments at home, often while balancing childcare, limited space and the wider uncertainty created by the pandemic.
What began as an emergency response quickly developed into a major experiment in flexible working.
PwC compared two broad scenarios: one in which office-based employees eventually returned to their workplaces, and another in which they continued to be advised to work from home universally.
The report estimated that prolonged universal home working could leave UK GDP approximately £15.3 billion lower each year than under a scenario involving a return to office-based work.
The reduction was linked to several factors.
Office workers typically spend money during their commutes and working days on:
When employees remained at home, much of this spending disappeared.
The consequences extended beyond the individual businesses receiving the money. Reduced demand affected supply chains and lowered incomes for employees working in sectors dependent on office populations.
Cities benefit economically when businesses and employees operate close to one another.
Physical proximity supports:
PwC suggested that a permanent move away from offices could weaken some of these clustering benefits, particularly in major commercial centres.
The report estimated that the reduction in economic activity associated with widespread home working could have an effect on hours worked equivalent to approximately 250,000 full-time jobs each year.
This did not necessarily mean that exactly 250,000 named positions would disappear. Instead, it represented the potential reduction in total working hours across affected sectors when converted into full-time equivalents.
The move to home working had consequences far beyond office-based employees.
Many jobs depend on workers being physically present in commercial buildings and city centres, including:
When office occupancy fell, demand for these services declined.
This was particularly significant for Facilities Management, where service models, staffing requirements and contract values were closely connected to building occupancy.
Reduced office use therefore had the potential to affect both direct FM employment and the wider network of suppliers supporting commercial workplaces.
Office workers reported spending less each week while working from home than they had previously spent while travelling to and working from an office.
Retail, hospitality and leisure were expected to experience some of the greatest reductions.
PwC estimated that annualised retail spending during August and September was approximately £2.2 billion lower than in February 2020.
Because the UK retail sector relied heavily on domestic workers and suppliers, a prolonged reduction of this scale could have wider consequences. The report estimated that UK GDP could be around £2.6 billion lower each year, with working hours equivalent to approximately 64,000 full-time jobs potentially at risk.
The economic picture was not entirely negative.
Working from home removed the daily commute for millions of employees, reducing travel costs and freeing considerable amounts of time.
Some workers used part of this additional time to work longer or more productively. Others reported being able to concentrate more effectively away from the interruptions of a busy office.
A 2014 report from the Centre for Economics and Business Research suggested that a shift towards more flexible working could add approximately £11.5 billion a year to the UK economy through the more productive use of working time.
Flexible working could also make employment more accessible to people who might otherwise remain economically inactive, including:
The research suggested that greater participation of this kind could potentially deliver a much larger long-term economic benefit.
Many employees reported that home working improved their work-life balance.
Potential benefits included:
Research has repeatedly linked stronger employee wellbeing with higher productivity, engagement and retention.
For some organisations, offering flexible working could therefore support performance while also strengthening their ability to attract and retain skilled employees.
However, the experience was not universal.
Some workers struggled with:
This demonstrated why a single working model was unlikely to suit every employee.
One of the report’s clearest conclusions was that flexibility mattered.
Employees and organisations were likely to achieve the best results when individuals had some choice over where and how they worked, taking account of factors such as:
A rigid requirement to work entirely from home could be just as problematic as requiring every employee to attend an office full-time.
The most effective approach would be one designed around the needs of the role, the organisation and the individual.
Although many employees valued the flexibility of working from home, the office continued to provide important benefits.
Physical workplaces support:
These benefits may be particularly important for younger employees and people who have recently joined an organisation.
New starters often learn by observing colleagues, asking informal questions and building relationships. These opportunities can be more difficult to reproduce entirely through video calls and digital platforms.
The office was therefore likely to remain important, even if employees attended less frequently.
One of the most striking potential benefits of home working was the amount of time saved by avoiding the daily commute.
The report estimated that an average commuter working from home could save the equivalent of 47 days each year.
Employees were expected to use some of that time for personal activities and approximately 21 days’ worth for additional work.
This represented a substantial change in how people allocated their time and helped explain why many employees wanted to retain some form of home working after the pandemic.
A permanent shift towards home working had the potential to redistribute economic activity.
Spending previously concentrated in city centres could move towards:
This could support regional economies and contribute to the government’s levelling-up ambitions.
However, cities heavily dependent on office workers would need to adapt.
Commercial centres might require:
The future of the city centre would therefore depend on its ability to serve a wider range of residents, workers and visitors.
Businesses also identified potential cost savings from remote and flexible working.
Reducing office requirements could lower expenditure on:
However, these savings had to be balanced against the benefits of having employees together in one place.
Organisations also faced new costs associated with:
The financial case therefore depended on the organisation’s circumstances rather than a simple assumption that working from home was always cheaper.
PwC’s findings pointed towards a lasting shift in working patterns rather than the complete disappearance of the office.
Seven in ten professionals reportedly wanted to spend no more than two days a week in the office, while only a quarter wanted to return full-time.
Employees increasingly expected organisations to provide both:
This suggested that hybrid working could become the dominant model for many office-based roles.
To benefit from both home and office working, organisations needed to remain agile.
Important considerations included:
The strongest strategies would place employees at the centre while also reflecting operational and commercial realities.
The move to home working produced both economic opportunities and serious challenges.
Remote working offered flexibility, reduced commuting and potential productivity improvements. At the same time, prolonged low office occupancy threatened spending, employment and the economic vitality of city centres.
The debate was therefore never as simple as choosing between home and office working.
The real opportunity lay in understanding the strengths of both.
Flexible and hybrid models could allow businesses to reduce costs, improve employee wellbeing and access a wider talent pool while preserving the collaboration, culture and economic activity supported by physical workplaces.
COVID-19 accelerated changes that were already beginning to reshape the workplace. The long-term success of those changes would depend on whether employers and policymakers could create working models that supported people, productivity and the wider economy simultaneously.
