Covid may change Scottish business landscape permanently, report finds

MAJOR cities in Scotland could see an influx of businesses from smaller areas to occupy some of the space freed up by companies moving employees to hybrid working patterns, triggering a rise in employment in large urban centres.

And high streets in provincial towns could flourish if their services can be tailored to the growing numbers of people now spending more of their week working from home.

These are among the potential shifts in the way people work, shop and interact highlighted by a new report published by accountancy giant KPMG.

According to the report, office space capacity in major business hubs could rise by as much as 40 per cent as employees in certain sectors spend two to three days working from home on a permanent basis. And that could in turn draw businesses from smaller areas into cities, with the report suggesting the likes of Glasgow, Edinburgh and Aberdeen could see employment rise by between five and seven per cent.

Simultaneously, smaller towns and cities may benefit from residents spending more of their working week at home. The report concluded that businesses in areas such as East Dunbartonshire, Clackmannanshire and East Renfrewshire can expect to see a rise in local demand from the trend.

But the report also warns that the impact will not be uniform across the UK. It notes that some places may be hit relatively hard by the loss of office workers because of their proximity to a larger business hub, and that this damage may be compounded by the loss of commuter footfall among remaining employees now working from home.

KPMG’s analysis also suggests UK labour productivity could rise by 0.5 per cent as a result of businesses being able to tap into a larger pool of workers, suppliers and clients.

James Kergon, senior partner at KPMG in Scotland, said: “Over time, the shift in business location could support the rise of several commercial hubs across Scotland.

“The increase in the concentration of firms and workers has the potential to make those companies located there more productive and enable these areas to serve as the engines of economic growth. Cities like Glasgow, Edinburgh and Aberdeen all stand to benefit from the consolidation of business locations.

“They will need government to work closely with local leaders to ensure the transition is smooth and any barriers to growth are quickly ironed out.”

KPMG UK chief economist Yael Selfin said: “As we emerge from the pandemic, businesses need to adapt to the new environment they will be facing.

“Some may choose to relocate to larger business hubs to boost profitability, while others in less central areas could see their local customer base profile change.

 “While the overall impact on the UK economy is expected to be positive, the changes ahead could prove challenging for those businesses already saddled by the pandemic.”

Ms Selfin added that there could be a “revival of the local high street” as a result of people spending more time working from home and less in the office.

But she said those high streets “will need to transform into places of purpose to meet demand for community-based services, hospitality, culture, as well as retail. High street offerings in smaller towns and cities may need to become more focused on residents’ needs and less focused on businesses and commuters.

“This transformation will require local government, residents and businesses to work together to map their future shape.”

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