HAMISH MCRAE: Ghost towns will be a disaster

All city centres are in big trouble and London is in the biggest trouble of all. Walk across the City’s financial district and it is a ghost town, with hardly anyone there. The West End feels like a Bank Holiday but without the tourists. The gleaming office blocks are empty, the coffee bars and restaurants shut. 

The financial services industry has been one of the least impacted by the shutdown, because individuals and businesses still need people to manage their money, make loans and keep the normal functions of the economy moving. Right now the industry has also to organise the finance for the Government’s spending spree. But as we have discovered, much of this work can be done from home. 

Boris Johnson quite understandably has urged people to go back to their offices if they can. But not only do many people prefer working from home – at least part of the time – their employers find it more efficient that they should do so. A huge experiment has taken place, something you could never do in normal times. The results are uncertain, because we are still in the middle of it, and what can work for a few months probably cannot work forever. 

But while offices will still be needed to some extent, it is already clear that quite a lot of office work will never come back. 

Thus the German giant Siemens has told its 140,000 employees to work from home two or three days a week. Communications technology is replacing physical presence partly because most employees prefer that, but more importantly because it saves money. 

There are big positives here. Efficiency and productivity will climb. Less time will be wasted commuting. There will be benefits to health and to the environment. 

But there will also be big negatives. What will happen to those office towers? Who will pay for the urban transport systems, if their use falls by one-third or more? What happens to theatres and other entertainment centres? And what will become of all those people, mostly young, who provide services for office workers? 

London has had tough times before. Anyone who can remember the late 1940s and the 1950s will recall the bomb sites, the unpainted houses, the grime, the poverty. It was a bleak shadow of the shining capital it is today. 

London, it was said, ‘had had the stuffing knocked out of it’. It took more than half a century to regenerate the wealth that had been destroyed. 

However, London did have the advantage of being a global city. Other places around Britain have faced similar struggles to rebuild their economies without that following wind, and some scars remain to this day. 

The prospect now is nothing like as bad as after the Second World War. The economy as a whole will recover. But as it does so there will be parts – and people – that get left behind. If our city centres remain ghost towns it will be a social disaster as well as an economic one.

…………………………………………………………………………………………………………………….. 

We will see what comes out of the efforts to create a European €750billion rescue fund, and Britons should welcome from the touchlines whatever emerges. A decent European economy is better for everyone. 

But remember this. The number sounds huge but actually is not that big in relation to the EU economy, about 5 per cent of its GDP. A large part will be in loans, not grants. 

But since even Greece can borrow at 1.2 per cent for ten years, yet more loans are not much help. The south of Europe – Greece, Italy, Spain – has been particularly savaged by the virus. Whatever the EU does will only give marginal relief.

……………………………………………………………………………………………………………………..

There have been a lot of forecasts showing that China will pass the US in economic size in about ten years’ time. 

But if you look to the second half of this century, it looks equally likely that the US will pull back above China and become number one nation again. 

Projections from the University of Washington, published in The Lancet, show global population peaking in 2064, and the Chinese population falling long before that. The US, on the other hand, goes on growing, helping push past China in economic might. 

And the UK? Well, we become Europe’s most populous country, passing Germany – a prospect that should give everyone pause for thought.