The labour market in London has been hit harder by Covid-19 than the rest of the UK, while the capital’s economic recovery has also been weaker, according to a report on the impact of the pandemic on the capital. A review of London’s economy from the Centre for London thinktank and King’s College London shows there have been steeper falls in the number of workers on company payrolls in the capital and in the number of new job postings than elsewhere in the country. About 200,000 fewer employees were on London payrollsin October than last year, according to early estimates, a bigger fall than in the rest of the UK. By October, there had also been a 170% increase in the number of people in London claiming unemployment-related benefits, compared with the same period in 2019, equal to about 300,000 new claims. Across the UK as whole, new unemployment-related claims increased by 120% over the same period. Researchers found most of the increase in unemployment came during the first national lockdown in the spring, and the claimant count has dropped slightly since. Unemployment in the capital now stands at 5%. However, unemployment is expected to rise further as a result of England’s second lockdown, and the chancellor Rishi Sunak’s previous plans to end the job furlough scheme in October. He subsequently reversed those plans, extending the scheme until March. Contrasting with the gloomy picture for employment in the capital, business activity appears to be slightly higher in London than the rest of the UK, according to data from the NatWest/IHS Markit purchasing managers’ index. Central London, which has relatively low numbers of residents, has had the deepest and most prolonged drop in the consumer economy owing to a lack of visitors and more workers being able to work remotely than elsewhere in the UK. The number of passengers travelling on the capital’s underground, rail and bus networks remains way below normal levels. Eight months into the pandemic, there has not been a single day where journeys on the underground have reached 45% of pre-pandemic levels while buses are running at 60% of normal passenger levels. In central London, demand has dropped for both private housing and office space, as employees have continued to work remotely. Average rents in central London’s zone 1 have decreased by 25% compared with 2019, owing to the absence of tourists and business travellers. However, strong increases in rental costs have been recorded away from the centre, as London’s suburbs remain popular. The shift in activity from central London to outer areas, and corresponding rise in rental costs, is a cause for concern for the researchers. They found that residents of outer London were more likely to have lost their job or lost income as a result of the pandemic.