Ideas: Will cities bounce back?

With lockdown turning cities across the UK – and the world – into ghost towns, Richard Dawson asks Paul Swinney of the Centre for Cities if our urban spaces will bounce back from this crisis

After two centuries of urbanisation, roughly half of the world’s 7.8 billion residents now live in towns and cities.

This massive population shift from the rural to the urban has transformed the way we live, delivering unmatched economic, social and cultural progress along the way.

The growth in some places has been nothing short of exponential. London is now home to 9.3 million people, which is sparse relative to the world’s most populous city, Tokyo, where 37.3 million people now live.

Unsurprisingly, this process of urbanisation has made national economies dependent on city economies.

Here in the UK, for example, cities account for just 9 per cent of the country’s landmass but 60 per cent of the jobs and 62 per cent of GVA.

While population density can encourage collaboration, competition and diversity, it has become problematic in the age of coronavirus.

In fact, nowhere is the contrast between the pre-virus world and the ‘new normal’ as sharp as it is in cities.

High streets that are normally teeming with shoppers are eerily silent, as shuttered and sporadically boarded up storefronts create a feeling of foreboding emptiness.

Meanwhile, curtains are drawn and the lights are out at our favourite bars, cafes and restaurants – places which may not open for some time to come.

The city is the place where we feel most acutely that something has changed in the world – an urban exodus triggered by a global pandemic.

It’s no surprise then that the economic data has been so grim when we consider that our cities – great engines of commerce, trade, investment and spending that they are – have been effectively switched off for the last seven weeks.

The question, therefore, is to what extent will our cities recover?

“I think they will bounce back,” says Paul Swinney, director of policy and research at the think tank, Centre for Cities.

“The reason is that face-to-face interaction is so important. Not only are we social beings who enjoy being in groups of people. In terms of work, it is also much easier to communicate information between colleagues when you’re face-to-face and sitting in the same room.

As well as facilitating easier collaboration between colleagues, face-to-face interaction enables the kind of personal relationships that are often prerequisites for getting business deals across the line.

“If someone is going to lend someone else an awful lot of money, for example, they’re going to want to see the whites of their eyes first before doing that,” Paul adds.

The enduring appeal of the city is also demonstrated by the fact that many businesses whose employees already enjoy flexible working practices – from software developers, PR managers and IT providers to lawyers, accountants and financial advisers – have chosen to keep offices in the city centre.

“Many of these jobs could, in principle, have been done at home for the last 20 years,” explains Paul. “But we know that there’s a real benefit of being based in a city centre environment. You can have face-to-face interaction with a lot of different people and companies will pay very high [city centre] rents to do so.”

However, while it is true coronavirus will not reverse an urbanising trend that is 200 years in the making, this does not mean the impact on our cities will not be severe.

In the North East, Centre for Cities expects the coronavirus crisis to hit hard in both the short and long-term.

Sunderland in particular is seen as vulnerable due to high industry exposure and high levels of household debt.

The ‘city by the sea’ is also still recording the highest number of cases per population in England according to Centre for Cities, with 435 infected per 100,000 of the population.

Paul says: “The mix of industries that are in Sunderland means that jobs are more exposed, particularly around automotive. Nissan suspended operations, for example, which will have had a big impact on the city.”

Add to this the fact that, at 21 per cent, Sunderland’s debt-to-income ratio is the joint highest out of any city in the UK. This means that for every £5 earned, the average Wearside household owes £1.

“In this context,” adds Paul, “if someone has been furloughed and has got a lot of debt, that 20 per cent cut is really going to bite them.”

While industry exposure and indebtedness do pose problems for Sunderland, the city has managed to leverage in hundreds of millions in private sector investment in recent years that could make all the difference in the long run.

As with everything coronavirus related, it is difficult to scan a longer term horizon when so many questions are still unanswered.

What we can say with some degree of certainty though, is that cities – despite their challenges – will be at the forefront of the economic recovery when it comes.