UK recovery reached its peak on September 4th with a reading of 88 but is now showing signs of decline.

Avison Young’s UK Cities Recovery Index has identified that the rate of recovery across the UK has significantly slowed after reaching a peak on September 4th with the highest reading to date of 88* compared to the lowest of 33 on April 30th. Despite early signs of encouraging recovery, a combination of new government guidance and general concern among the public has seen this recovery level off, and in some cases begin to decline.

The Recovery Index uses a variety of high-frequency indicators to track key aspects of city life and includes detailed analysis and insights into the rate and trajectory of recovery following the impact caused by COVID-19. By monitoring the way in which the pandemic impacts different aspects of the economy and society almost in real-time, Avison Young is able to identify early signs of any significant shift in recent trends.

Dr Nick Axford, Principal, Global Head of Research at Avison Young comments:
“Having access to the most up-to-the-minute data via Avison Young’s UK Cities Recovery Index allows us to closely monitor the recovery across a range of sectors. Looking at the latest data points, it is clear that the increase of restrictions paired with general concern around resurgent rates of infection is having a direct impact on all areas of city life. Overall, the recovery we saw over the summer is clearly slowing and in some cases, it’s going into reverse. The Government rightly recognises the need to balance control of the disease with keeping the economy moving. The health and vitality of our major cities is a key indicator of their success in doing so.”

Following a period of respite during the early summer from the declines seen during the spring, ‘Super Saturday’ on July 4th caused a jump in activity which pushed the National Recovery Index up by 12% as many shops, restaurants, pubs and other businesses reopened. The return to school in September also provided some short-lived upward momentum in the Mobility Index; there was then a knock-on effect on the Return to Office Index, as many newly liberated parents were able to get back to their workplaces for the first time in months. This illustrates the economic importance of the Government’s commitment to try to keep schools open wherever possible.

Hospitality, Hotel & Leisure

Following the ‘Rule of 6’ and most recently the introduction of the 10pm curfew, the hotel & leisure sector is currently facing increased pressures. ‘Eat Out to Help Out’ saw bookings in restaurants and pubs from Monday to Wednesday increase above pre-lockdown levels with bookings increasing by 53% during August. The impact of the scheme is clearly evident in the Hotel & Leisure Index. The sector has continued to report strong figures since the scheme has finished, with September’s levels only marginally down on the same period last year.

Naturally, with many turning to ‘staycations’ rather than travelling abroad, the hotel sector has also seen a partial rebound and some signs of recovery after seeing widespread closure during lockdown. However, with children heading back to school, parents returning to work and business travel severely curtailed, the Hotel & Leisure Index has declined consistently since the end of August.

This initial decline is a potential early indication of the trend of the coming weeks and a reflection of the direct impact that government guidelines have on the way the public are choosing to spend their time. Change in behaviour following government guidance has continued to have a direct impact across all sectors with the general trend of recovery levelling off and in some cases, declining.

London’s Rate of Recovery

London was hit harder by the pandemic back in April than the national average. The Recovery Index showed that London fell to a lower level of 29, compared to the national average of 33 across all sectors. Since April, London has continued to demonstrate a slower rate of recovery compared to national data.

The challenges for the capital have arisen due to reduced footfall as a result of under-utilised offices and lack of tourism, particularly since the schools reopened at the beginning of September. On September 27th, the footfall measures showed that London was 26% below the national average. The sectors that have been hardest hit, and therefore the main contributors to the steeper decline, have included mobility, return to office and hotel & leisure. London’s heavy reliance on public transport, which commuters have sought to avoid, was an issue over the summer. However, there were clear signs of a recovery in employees returning to the office through September; it remains to be seen whether the Government’s revised policy in asking people to work from home again will have a particularly significant impact on life in the capital.

Daryl Perry, Head of UK Research at Avison Young says:
“We are continuing to live in a time of great disruption to our normal lives. As a result, traditional ways of looking at the economy and our markets no longer quite cut it. All aspects of city life are interconnected, and the data we collect through the Recovery Index allows us to gain unique insight into the vitality and health of our cities as a whole.

Unfortunately, it is quite clear that the road to recovery will be longer than we hoped for. Nevertheless, it is worth remembering that our cities have experienced challenges before. We continue to believe in the strength and resilience of our cities as economic powerhouses and as homes for people and businesses. In the short term, the most resilient cities will be those where there is a diversity of activity and all stakeholders from local and central government to landlords and businesses are working together.”

Additional points of interest:

• From the 30th April to the 26th August, the national Mobility Sector Index increased from 29 to 95 - the strongest recovery across the sectors.
• The strength of the housing market recovery in the last few months has exceeded expectations. The larger cities have outperformed in the Residential Sector Index, London saw the largest increase in the number of listings, followed by Manchester. However, the Residential Sector Index suggests that activity may now be slowing, following a strong, sustained rebound from the lockdown lows.
• The National Retail Sector Index has fallen off slightly from the August bank holiday peak at 88, standing at 83 on 27th September.

The UK Cities Recovery Index is available here: www.avisonyoung.co.uk/ukcitiesrecoveryindex

* The data is normalised and converted to an Index which is rebased to 100 at the end of February 2020.