Businesses in central London lost the equivalent of an entire year of sales in the first 18 months of the coronavirus pandemic, a Centre for Cities report released on Monday has found.
It also suggested that the much trumpeted rise in online shopping was not necessarily the result of a shift away from the high street and that offline spending has returned to pre-pandemic levels.
The hefty economic hit to the UK capital was reflected in other major metropolises with Birmingham and Edinburgh the next worst affected.
Their traditionally stronger high streets both lost more than 40 weeks of sales between March 2020 and September 2021. The national average during this period was 28 weeks. Conversely, smaller metropolises such as the northern towns of Burnley and Warrington lost five times fewer weeks of sales.
The report, which was released in the week Boris Johnson's government is expected to announce the next stage of its 'levelling up' agenda for the UK's poorest regions, ascribes this trend to the pandemic turning conventional strengths into Covid-19 weaknesses.
Before the emergence of the coronavirus, stronger town and city centres exerted a firm gravitational pull on workers, shoppers and tourists from farther afield. Customers from outside their boundaries accounted for 54 per cent of business sales, according to the report. The equivalent figure for towns and cities with weaker high streets was 37 per cent.
These weaker high streets have fewer non-essential retail shops, office blocks and hospitality outlets than their stronger counterparts. They are also surrounded by more less-affluent areas.
As such, when Covid-19 struck and restrictions were imposed which closed all but shops deemed essential and mandated home-working, these smaller centres were less exposed than their stronger counterparts as, put bluntly, they had less to lose.
Centre for Cities data bore this out, with stronger city centres experiencing the largest drop in spending in April 2021.
Its data also showed that hospitality — intrinsic to the economic well-being of stronger centres — was the sector most affected by the pandemic.
The proportionally greater drop in sales in stronger city centres had a knock-on effect on store vacancy rates.
Business closures in these locations have increased by 3.5 percentage points during the pandemic, up from 1.4 percentage points in the two years before. On the other hand, in economically weaker centres the number of closures has fallen from 3.6 to 2.5 percentage points since 2020.
Many of these places are in the so-called Red Wall so there is a political imperative for the government to act fast, as well as an economic one
Andrew Carter,
Centre for Cities
Centre for Cities suggested the UK government's Covid-10 support measures had been more effective in limiting damage in weaker high streets, but warned that they may only have served to defer the hardship with less-prosperous places in the North and Midlands facing a wave of new business closures later this year.
“To help [these places] avoid a wave of high street closures this year, the government must set out how it plans to increase peoples’ skills and pay to give them the income needed to sustain a thriving high street,” said Centre for Cities chief executive Andrew Carter.
“Many of these places are in the so-called Red Wall [of former Labour Party seats] so there is a political imperative for the government to act fast, as well as an economic one.”
Mr Carter is less concerned about the long-term prosperity of the “levelled down” stronger city centres, which he said were “well placed to recover quickly from the past two years".
The City for Centres report said that this recovery could be expedited by campaigns encouraging leisure customers into cities, and the introduction of flexible rail tickets to make the prospect of working from offices less financially onerous to prospective commuters.
Online sales assumption queried
Further cause for optimism can be found in data monitoring online and offline sales throughout the pandemic.
The rise in online spending has been well documented, but the report questions the widely held belief that this rise comes at the expense of sales on the high street.
It found that by September 2021, spending in bricks and mortar stores had bounced back in most cities (52 out of 62), including those where internet shopping increased the most, such as Exeter and Cardiff.
It did not find evidence, however, that online spending replaced shopping that would otherwise have been done in city and town centres. In other words, rather than eating into the existing sales pie, digital retail appears to have expanded it.
During the period monitored, the biggest shift was in groceries where online spending was between 200 and 250 per cent higher than the 2019 baseline.
Despite a rise in the amount of food and drink bought on the internet when restrictions were introduced, offline spending in restaurants, pubs and cafes had bounced back well above the baseline by September 2021.
Even in the fashion retail sector, which was heavily affected by the pandemic, bricks and mortar spend was, on average, close to full recovery.
The report does acknowledge that this latter data set somewhat obscures a key variation: offline spending on clothing was at or above the baseline level in just seven cities.
It thus postulates Covid-19 may have accelerated the demise of fashion retailers in some high streets, especially weaker ones where this sector takes up a higher share of spend.
COMPANY%20PROFILE
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COMPANY PROFILE
Name: Lamsa
Founder: Badr Ward
Launched: 2014
Employees: 60
Based: Abu Dhabi
Sector: EdTech
Funding to date: $15 million
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
The biog
Favourite hobby: taking his rescue dog, Sally, for long walks.
Favourite book: anything by Stephen King, although he said the films rarely match the quality of the books
Favourite film: The Shawshank Redemption stands out as his favourite movie, a classic King novella
Favourite music: “I have a wide and varied music taste, so it would be unfair to pick a single song from blues to rock as a favourite"
Find the right policy for you
Don’t wait until the week you fly to sign up for insurance – get it when you book your trip. Insurance covers you for cancellation and anything else that can go wrong before you leave.
Some insurers, such as World Nomads, allow you to book once you are travelling – but, as Mr Mohammed found out, pre-existing medical conditions are not covered.
Check your credit card before booking insurance to see if you have any travel insurance as a benefit – most UAE banks, such as Emirates NBD, First Abu Dhabi Bank and Abu Dhabi Islamic Bank, have cards that throw in insurance as part of their package. But read the fine print – they may only cover emergencies while you’re travelling, not cancellation before a trip.
Pre-existing medical conditions such as a heart condition, diabetes, epilepsy and even asthma may not be included as standard. Again, check the terms, exclusions and limitations of any insurance carefully.
If you want trip cancellation or curtailment, baggage loss or delay covered, you may need a higher-grade plan, says Ambareen Musa of Souqalmal.com. Decide how much coverage you need for emergency medical expenses or personal liability. Premium insurance packages give up to $1 million (Dh3.7m) in each category, Ms Musa adds.
Don’t wait for days to call your insurer if you need to make a claim. You may be required to notify them within 72 hours. Gather together all receipts, emails and reports to prove that you paid for something, that you didn’t use it and that you did not get reimbursed.
Finally, consider optional extras you may need, says Sarah Pickford of Travel Counsellors, such as a winter sports holiday. Also ensure all individuals can travel independently on that cover, she adds. And remember: “Cheap isn’t necessarily best.”
Pros%20and%20cons%20of%20BNPL
%3Cp%3E%3Cstrong%3EPros%3C%2Fstrong%3E%0D%3C%2Fp%3E%0A%3Cul%3E%0A%3Cli%3EEasy%20to%20use%20and%20require%20less%20rigorous%20credit%20checks%20than%20traditional%20credit%20options%0D%3C%2Fli%3E%0A%3Cli%3EOffers%20the%20ability%20to%20spread%20the%20cost%20of%20purchases%20over%20time%2C%20often%20interest-free%0D%3C%2Fli%3E%0A%3Cli%3EConvenient%20and%20can%20be%20integrated%20directly%20into%20the%20checkout%20process%2C%20useful%20for%20online%20shopping%0D%3C%2Fli%3E%0A%3Cli%3EHelps%20facilitate%20cash%20flow%20planning%20when%20used%20wisely%0D%3C%2Fli%3E%0A%3C%2Ful%3E%0A%3Cp%3E%3Cstrong%3ECons%3C%2Fstrong%3E%3C%2Fp%3E%0A%3Cul%3E%0A%3Cli%3EThe%20ease%20of%20making%20purchases%20can%20lead%20to%20overspending%20and%20accumulation%20of%20debt%0D%3C%2Fli%3E%0A%3Cli%3EMissing%20payments%20can%20result%20in%20hefty%20fees%20and%2C%20in%20some%20cases%2C%20high%20interest%20rates%20after%20an%20initial%20interest-free%20period%0D%3C%2Fli%3E%0A%3Cli%3EFailure%20to%20make%20payments%20can%20impact%20credit%20score%20negatively%0D%3C%2Fli%3E%0A%3Cli%3ERefunds%20can%20be%20complicated%20and%20delayed%0D%3C%2Fli%3E%0A%3C%2Ful%3E%0A%3Cp%3E%3Cem%3ECourtesy%3A%20Carol%20Glynn%3C%2Fem%3E%3C%2Fp%3E%0A
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Company profile
Name: Fruitful Day
Founders: Marie-Christine Luijckx, Lyla Dalal AlRawi, Lindsey Fournie
Based: Dubai, UAE
Founded: 2015
Number of employees: 30
Sector: F&B
Funding so far: Dh3 million
Future funding plans: None at present
Future markets: Saudi Arabia, potentially Kuwait and other GCC countries
