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March 5, 2018updated 09 Mar 2018 12:56pm

UK cold weather could halve the forecasted GDP growth

The blast of Siberian cold weather known as the ‘Beast from the East’ that hit the UK last week looks set to send a chill over Britain’s economy and halve the 0.4% GDP growth economists had forecast for the first three months of 2018.

By Pamela Kokoszka

The blast of Siberian cold weather known as the ‘Beast from the East’ that hit the UK last week looks set to send a chill over Britain’s economy and halve the 0.4% GDP growth economists had forecast for the first three months of 2018.

Managing partner of Retail Remedy Phil Dorrell, said: “It will be bad for the high street. Anything that takes footfall away from shops reduces spend, and pushes spend towards the internet.

“In the short term, it’s very much a disaster. If you go down to the nearest road you will see that traffic is significantly less than it was previously, so most parts of retail will be hurting at this point.”

One small firms group forecasts a loss of £7,000 each on average for its members.

Howard Archer, chief economic adviser to UK forecasting group the EY ITEM Club, said: “It is possible that the severe weather could lead to GDP growth being reduced by 0.1 percentage point in Q1 2018 and possibly 0.2 percentage points if the severe weather persists.”

The snow impacted not only shops but also the supply chains of big businesses, restaurants and the travel sector.

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“There will obviously be a significant hit to UK economic activity from disruptions resulting from the severe weather conditions,” Archer added.

According to Archer, the lost activity will eventually ‘be recouped’, and the increasing ability of people to work from home would help limit the economic damage.

A survey published by CBI employers’ group this weekend said that trading conditions for consumer-facing firms were still tough.

Dorrell believes that ‘bricks and mortar retailers will be hit hard by the sub-zero temperatures and gale-force icy winds’.

Dorrell said:  “Anything that takes footfall away from shops reduces spend, and pushes spend towards the internet.

“In the short term, it’s very much a disaster. If you go down to the nearest road you will see that traffic is significantly less than it was previously, so most parts of retail will be hurting at this point.”

According to the Federation of Small Businesses (FSB), over the past week high streets looked like ghost towns.

FSB chairman Mike Cherry said: “Even among those which have battled on, many have been affected by customers or supplies being unable to reach them.

“The financial cost of severe weather events on small firms averages at around £7,000 for each affected business.

“It comes at a time when many have been affected by rises in business rates, increasing employment costs and the effects of the weak pound,” he concluded.