Snow may be billion-pound loss for British economy

4th February 2009, Comments 0 comments

With Britain in recession, the rare cold snap risks putting many struggling businesses into the deep freeze for good.

London -- The snowstorms that paralyzed Britain may have cost businesses already battling the credit crunch up to a billion pounds, experts said Tuesday.

The 10 centimeters (four inches) of snow which coated London, Europe's financial capital, on Monday virtually shut down air, rail and road links, forcing thousands of workers to stay at home in the worst storms in 18 years.

With Britain in recession and facing what the International Monetary Fund says will be the worst slump in the developed world, the rare cold snap risks putting many struggling businesses into the deep freeze for good.

The Federation of Small Businesses, which represents over 200,000 business people, said one in five workers did not make it to the job on Monday, costing employers up to 1.2 billion pounds (1.3 billion euros, 1.7 billion dollars).

Spokesman Stephen Alambritis said if the bad weather continues this week, the cost could rise to 3.5 billion pounds.

Forecasters say Scotland, south Wales and parts of southern England will bear the brunt of the snow in the coming days, as the storms move past London and head north.

The bad weather also hit other European countries including France, Italy, Switzerland, Belgium and Spain.

Douglas McWilliams, chief executive of the Center for Economics and Business Research, suggested several thousand firms could go bankrupt after the snow in Britain, especially if it lingers.

"If it leads to delayed payments, the combined hit on profits and cash flow could send many businesses who might be close to the brink into premature bankruptcy," he told the Guardian newspaper. "Many are in retail and construction, sectors likely to be most affected by snow and transport disruption."

But, he added, the cold weather could have an upside for some sectors.

"Consumers spend more on heating and on warm clothes and any accidents or structural damage leads to increased spending on repairs," said McWilliams.

"Any disruption to business is the very last thing that the UK economy needs in its current extremely weak state,” Howard Archer of analysts IHS Global Insight said.

Business leaders have criticized officials in London and southeast England for not doing more to prepare for the snow, despite forecasts predicting a blizzard. Local authorities also came under fire for closing schools.

The BBC reported that 6,000 schools were shut across Britain on Tuesday, including every school in the northwestern city of Birmingham.

Schools Secretary Ed Balls said any inconvenience to working parents was "really regrettable" but that local councils had acted properly.

David Frost, director-general of the British Chambers of Commerce, said images of snowbound Britain were embarrassing abroad.

"All the European channels were showing images of London at a complete standstill, which was not a very positive image for the UK," he told BBC radio. "I wonder whether we have become a bit too complacent ... when something like this does happen, we are caught very much on the hop."

Former London Mayor Ken Livingstone criticized current Mayor Boris Johnson after the widespread failure of the city's public transport system Monday.

Even the iconic red buses, which stayed on the road during World War II German bombing raids on London, failed to run for the first time in 100 years.

British television ran pictures of bus drivers enjoying snowball fights instead.

Johnson blamed the "wrong quantity of snow" for the problems and told BBC radio that "unleashing a 12-tonne bus onto heavily packed snow or ice" would risk "turning it into a lethal weapon."

But Alambritis urged him to consult his counterparts in cities like Moscow and Vancouver on keeping public transport on track despite snowfalls.

"We need this debate," he said. "One of the world's biggest economies should not be grinding to a halt, even if it is only once every 10 years."

Meanwhile, the weather claimed another victim when a 16-year-old girl died late Tuesday after being badly injured in a sledging accident in Yorkshire, in northern England. Two climbers died on Mount Snowdon in Wales on Monday.

Katherine Haddon/AFP/Expatica

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