Cold weather biggest GDP killer

Quarterly UK GDP drops by £2.5bn if temperatures fall one degree below average, report finds

Forget snow or heatwaves – cold weather is the biggest detriment to UK business, according to research released by economists from the Centre for Economics and Business Research (CEBR).

The research, which was commissioned by cloud services firm 8x8 Solutions, examines the relationship between economic growth and weather events and was compiled using economic data from the ONS and weather data from the Met Office.

The report found that since 2005, when there has been very cold weather, GDP growth was on average 0.6 percentage points lower than typical levels. It found that quarterly GDP is on average £2.5bn lower when minimum temperatures are 1°C lower than the average.

According to the report, this is a larger negative impact than any other weather condition, such as heatwaves or flooding, as the cold weather leads to lower output and lowers productivity due to transport problems.

8x8 Solutions specialises in delivering unified communications and collaboration services in the cloud to SMEs, and commissioned the report to stress the need for "businesses to prepare for adverse weather to limit lost productivity".

The report investigated which industries were the worst affected by inclement weather, and found that the information and communications sector was one of the few to see positive growth during bad weather because, they determined, this industry leads the way in cloud technology, which allows staff to work from home.

Scott Corfe, head of UK Macroeconomics, said smaller businesses were the worst hit by these cold snaps.

"Many small offices are unprepared for such events as they often lack remote access to their work due to security concerns and a lack of infrastructure.

"This is compounded in many cases by inadequate internet connections or computing power at staff homes. In addition, SMEs tend to suffer more than their larger counterparts who can spread the setup and maintenance costs of remote working infrastructure across many more staff," he said.