20 Dec 2010

Snow chaos costing UK economy £1.2bn a day

Britain’s economy could be drained of more than £1bn a day as freezing temperatures persist and more snow falls, leaving retailers counting the cost of the disruption.

UK snow: bad weather in Britain is costing the economy £1.2bn a day, according to the RSA (Image: Reuters)

With just five days’ Christmas shopping left, retailers are hoping for a reprieve from the freezing conditions that has hampered workers’ journeys in, and kept many shoppers at bay.

David Greaves, director at insurers Royal Sun Alliance (RSA), said: “The cold snap we had in early December has already cost the economy in the region of £4.8bn, so the bad weather forecast for this week couldn’t come at a worse time for some businesses. The impact will be felt across the whole economy.”

According to the RSA, the return of the big freeze could cost British business more than £1.2bn a day.

Heavy snow caused travel chaos on the roads and railways on Saturday, with North London’s Brent Cross shopping centre forced to close entirely.

A spokesman for the British Retail Consortium (BRC) told Channel 4 News: “We don’t know yet how much it has hurt retailers, but clearly it has been harmful to many – they expected Saturday to be the busiest day of the year.”

High street stalwart John Lewis said the weather had shut down its delivery service.

“Owing to adverse weather conditions, we’ve had to bring forward our pre-Christmas home delivery cut-off date, and we’re sorry that we’re now unable to take further orders for home delivery in time for Christmas.

“We’ve taken this decision to enable us to do all we can to deliver existing orders to our customers in time for Christmas,” it said in a statement on its website.

Heavy snow in Scotland cost the group £5m – or 10 per cent of sales – on Saturday as shoppers stayed clear amid arctic conditions.

London’s retailers are braced for a further blow to key Christmas sales after business leaders warned a London Underground strike on Boxing Day.

Union members are planning a 24-hour walk out on Sunday in a row over bank holiday pay, claiming three extra days’ pay and a day off in lieu.

Stephen Robertson, Director General of the BRC, said: “This could be a major blow for London’s retailers and their customers on what’s now one of their most important days of the year. Around 380,000 jobs directly depend on a successful retailing sector in the capital.

“Retailers in London need a strong start to the post-Christmas sales. On the back of disruption caused by severe winter weather and student protests, they now face a difficult time in 2011 as VAT goes up and public sector cuts begin to take effect.”

Businesses must prepare themselves for more bad weather, PwC has warned.

Martin Caddick, business continuity leader at PwC, said: “Extreme weather looks set to increase and businesses that fail to prepare won’t know what they need to do in order to keep their business running through the disruption. Once the snow has fallen, it is too late.

“The exceptional snow fall and prolonged period of cold at both the start and end of 2010 demonstrates the need to take this seriously.

“Preparation is everything: Without preparation, organisations won’t know which key products and services must keep running, what their minimum resourcing levels are and what alternative places of work and ways of working are available.

“Proactive communication enhances reputation, while poor communication will lose business. Communicate regularly to ensure staff, suppliers, and customers are kept in the picture.”

Mr Caddick said that the most immediate impact of the weather is the disruption to transport, warning that businesses need to plan around staff absenteeism.

Figures released by the AA after last winter’s cold snap show that during January 44 per cent of workers struggled to get to work.

Airports and railways are expecting to lose millions amid the chaos. A BAA spokesman for Heathrow told Channel 4 News that it was too early to count the cost of the travel misery at Heathrow at this stage, but pointed out that the volcanic ash clouds cost the group £5m-£6m a day.

Network Rail meanwhile said: “It is in our interests to run as full a service as possible as we have to pay out compensation to train operators whose timetables are disrupted by infrastructure or weather problems.”

The Association of Train Operating Companies (ATOC) told Channel 4 News that train operators are drafting in staff on a 24-hour basis in order to keep services going – driving trains throughout the night to keep snow and ice off the tracks; as well as dispatching workers to de-ice crossroads.