LONDON (AP) — The Bank of England said Wednesday there are perfectly understandable reasons why the majority of office workers have yet to return to their pre-lockdown workplaces despite new coronavirus guidance from the British government.

Alex Brazier, the bank’s executive director for financial stability strategy and risk, told lawmakers on the Treasury Select Committee that the need for virus-safe environments and the related issue of trains packed with commuters means office workers cannot return en masse to city centers.

“I don’t think we can expect a sudden and sharp return of people to the very dense office environments that we were used to,” Brazier said. “We should expect a more phased return, depending on the public health outcomes we see in coming weeks and months.”

In recent weeks, Prime Minister Boris Johnson has sought to encourage office workers back after urging them to work from home in March. One key motivation behind the drive is that the U.K.’s city centers are clearly suffering economically from the lack of foot traffic. Many shops remain shuttered while traditionally busy sandwich bars and coffee shops are closing early.

With companies having to convert offices to meet virus guidelines, such as ensuring people are spaced far enough apart to ensure social distancing requirements, the return to work has been a slow process as evidenced by Transport for London figures showing numbers using the subway are still way down on pre-lockdown levels. Many parents are also reluctant to change course until they are convinced the reopening of schools has gone smoothly.

Meanwhile, Bank of England Governor Andrew Bailey said he understands why the government is ending a salary support initiative that has kept a lid on unemployment during the coronavirus pandemic.


He said the Coronavirus Job Retention Scheme, which has seen the government pay the bulk of the salaries of workers retained rather than fired during the U.K.’s virus lockdown, had been designed “very sensibly for a situation where 30% of the workforce couldn’t work.”

The government is ceasing the salary support at the end of October, a cutoff that has raised fears of a huge spike in unemployment from the current rate of 3.9% as firms decide they cannot retain workers who have effectively been idle since March.

The central bank has grown less pessimistic about the scale of the potential job losses after recent moves to ease the lockdown — shops were allowed to reopen during the summer, for example. In its last set of forecasts last month, the bank forecast unemployment rising to around 7.5%.

Bailey said there has been a “sharp reduction” in the number of firms utilizing the furlough program but that the rate of decline is “flattening.” He said around 13-14% of the U.K.’s labor force are in furlough, many within the arts and entertainment sectors that still face rigid lockdown restrictions.

“The change in the nature of the issue requires a sort of change in the nature of thinking of what the right policy mix is,” he said.

The British economy, which shrank about 20% since March, is recovering, though not uniformly. While household spending and the housing market are on the up, the outlook for business investment and social spending, such as dining out, is murky.


Bailey said the British economy as a whole will likely be permanently “scarred” as a result of the pandemic to the tune of 1.5% of its annual GDP. He stressed that all forecasts are clouded with huge uncertainty and that the bank has room for further stimulus measures.

As well as uncertainties related to the virus, the British economy also has a lack of clarity over the U.K.’s future trading relationship with the European Union, following its departure from the bloc earlier this year. Negotiations about future trade ties are deadlocked. If there is no deal by the end of 2020, tariffs and other impediments to trade will be imposed, which most economists think would cause relatively more damage to the U.K.


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