Covid reallocation of spending: The effect of remote working on the retail and hospitality sector

A defining economic outcome from the Covid-19 pandemic is the un- precedented shift towards remote working from home. The extent and du- ration of this shift will have important consequences for local economies and especially the retail and hospitality sectors which depend on business around the workplace. Using a new bespoke, nationally representative sur- vey of UK working age adults we analyse their ability and willingness to work remotely, and the consequences for spending on food, beverages, re- tail and entertainment around the workplace. We establish five key facts.(i)The post-pandemic change will be large: the fraction of work done from home will increase by 20 percentage points over its pre-pandemic level.(ii)The Dingel-Neiman (2020) assessment of remote working potential by occupation are reasonably predictive of what workers and employers ex- pect to do, with a correlation coefficient of over 0.7. (iii) Relocation will be higher for better paid professional occupations, which will skew spending toward the most socio-economically affluent geographical areas. (iv) The corresponding geographical shift in annual retail and hospitality spending will be £3.0 billion with more remote working shifting demand away from urban areas. (v) On average, a 1% change in neighbourhood workforce changes local spending by 0.25%.