BUSINESS UP-TURN? WANTED – ONE PROLONGED HEATWAVE

Looking for a business upturn? Forget the budget. What we need is a quick end to the winter freeze and a prolonged spell of warm sunny weather…

The appalling snow, blizzards and ice of the past few weeks have put paid to a business upturn this side of the second quarter. Indeed, it may have driven the out-turn for the first three months of the year into (yet another) economic downturn.

This atrocious weather hits the economy in a variety of different ways. It slows down if not halts altogether outside construction and infrastructure work. It provokes a sharp drop in high street spending with consumers less likely to venture out in freezing conditions.

People struggle to get into work. It disrupts the distribution of goods and services and the supply chains of thousands of businesses. And the impact on small firms can be particularly severe.

Tourist spending, restaurants, pubs and café bars are hit.  For millions of gardening and outdoor DIY enthusiasts for whom Easter is normally a high spend, high activity, high buzz long weekend of lawnmowers, strimmers and hedge cutters at full throttle, this Easter looks to be a write-off. 

And being stuck indoors when we crave to be out and about after a long winter is psychologically deeply depressing.

This period of atrocious weather could scarcely have come at a worse time as the economy is already struggling to avoid a ‘triple dip’ recession. “Even a slight hit to activity from the bad weather”, warns Global Insight economist Howard Archer, “could be the deciding factor that tips the balance towards a further drop in GDP.”

For many it scarcely matters whether the economy is a little above or a little below the expansion/contraction line – it is unrelievedly miserable.

The one beneficiary aside from utility companies and duvet manufacturers is the online retailer. Rather than go out to the shops millions will take to the internet and order online. Much will depend on how long this freak winter weather lasts. Retailers can count on lost customer spend being made up in subsequent weekends as the weather improves. But some sales will be permanently lost.

How big might the impact be?

Looking back to January gives some guide as to the bad weather effect. Retail sales volumes, Archer reminds us, fell 0.7 per cent month-on-month. And there was a 1.6% month-on-month fall in sales of predominantly food retailers influenced by a number of smaller stores being unable to open. In addition, petrol sales fell by two per cent month-on-month reflecting reduced driving in the bad weather. And the snow will have contributed to the 1.5 per cent month-on-month drop in manufacturing output in January. However, retail sales volumes showed a 2.1 per cent month-on-month jump in February as consumers made up lost purchasing ground.

It is not a total shutdown for the DIY sector. Indoor projects can be undertaken and soft furnishing and interiors could benefit. And the botched jobs and make-over disasters can always be made good by resort to professionals at a later stage: Black & Decker has probably ruined as many homes as it has improved.

And look on the bright side: no grunting and cursing over laborious weeding, scything and repairs to the decking this Easter. What’s not to like?