London’s economy could be dealt a blow of £100m per day during next week’s crippling Tube strikes, analysis suggests, as business groups claim the industrial action could help tip the UK into recession.
There will be little to no service across the entire London Underground from Monday to Thursday after the strikes begin on Sunday evening, after RMT members voted by over 90 per cent against an “unacceptable” below inflation pay offer of 5 per cent.
While RMT general secretary Mick Lynch has urged Transport for London (TfL) to “enter into meaningful conciliatory talks to avert disruption”, the body insists its pay offer “is the most we can afford while ensuring that we can operate safely, reliably and sustainably”.
The London Underground shutdown will last from Sunday evening until Thursday night— (Jack Taylor/Getty Images)
But business groups urged the RMT and London mayor Sadiq Khan to “find immediate solutions”, expressing fears to The Independent that strikes in the capital will dent the wider UK economy and put further strain on struggling firms.
“At a time when our economy is flatlining, these reckless strikes could tip us into recession,” said BusinessLDN chief executive John Dicki. “They will hit sectors such as hospitality and retail that rely on footfall especially hard. All sides should put ending these disruptive strikes at the top of their New Year’s resolutions.”
Urging a “swift and fair agreement that prioritises jobs and businesses”, the London Chamber of Commerce and Industry’s interim chief executive Karim Fatehi said: “We cannot afford to let these damaging strikes hit London’s SMEs, which have already been hard hit by Covid and global events.
“London is the engine of the UK economy, contributing over 20 per cent of our national GDP. If London slows down because of this strike, the entire country will suffer.”
Warning that the four-day Tube shutdown will “have a major impact on London businesses just as small firms are trying to make a bright start to a new year”, the Federation of Small Business said: “We want to showcase London to the world, but the signal sent by out-of-action transport systems isn’t helpful.
Analysis from investment bank Panmure Gordon suggests strikes could cost London’s economy £100m a day— (Leon Neal/Getty Images)
“London needs to show it is open for business, and we hope that all parties involved in the dispute are able to reach an agreement as soon as possible.”
The British Retail Consortium added: “Next week’s tube strikes will be detrimental to retailers, as they will hinder commuter, leisure, and tourist traffic. After an underwhelming festive shopping season, these strikes will impact already-vulnerable businesses in the capital.”
Simon French, managing director of investment bank Panmure Gordon, said his modelling from March – based on commuter volumes, displacement costs and average salaries – found that Tube strikes cost London’s economy £90m per day.
“Whilst overall consumer prices have gone up by about 4 per cent over the period – and there has been a further rebound in commuter volumes – you could argue it [is] closer to £100m/day,” Mr French suggested.
However, this is higher than previous estimates, with the Centre for Economics and Business Research finding the cost to be closer to £24m during Tube strikes in June 2022.
While resolutions have finally been reached in many of the national disputes which fuelled the most intensive period of industrial action in the UK since the 1980s, the first week of 2024 was marked by junior doctors staging the longest single strike in NHS history, with more fresh action on the horizon in other sectors.
Civil servants secured a 4.5 per cent pay rise and £1,500 cost of living payment with mass strikes in 2023— (AFP via Getty Images)
The Public and Commercial Services Union said it was preparing for the possibility of a nationwide ballot for industrial action over civil service pay, following a campaign in 2023 which saw the government agree to a £1,500 lump sum payment and raise of 4.5 per cent, after more than 100,000 civil servants walked out.
The union’s general secretary Mark Serwotka told The Independent: “Although we remain in positive talks with the Cabinet Office on several pay issues, we are not optimistic that they will produce enough in members pockets for 2024. As a result, PCS members and reps across the civil service are now preparing for the possibility of a UK-wide statutory industrial action ballot.”
Supermarket Asda will also face its first ever strikes this month when at least 100 staff walkout over 15 days, while employees at the newly opened flagship Amazon fulfilment centre in Birmingham have also voted to join the strikes which saw more than 1,000 Amazon staff in Coventry down tools in November for the first time.
Andy Prendergast, GMB national secretary, said: “Amazon and Asda are just the latest companies to face unprecedented strike action. Big businesses need to better appreciate who creates their profits – their hardworking staff. In an ongoing cost-of-living crisis working people across the economy are saying clearly that they deserve better.”
