Economic Climate

  • Bank of England under pressure as Britain just avoids recession. Photo: Yui Mok/PA Wire

    Heavy snow affected much of the UK in March. Photo: Lynne Cameron/PA Wire

    Cold weather resulted in a hard time for the high street in March. Photo: Lynne Cameron/PA Wire

  • Economic Climate
    25.04.2013 15:17

    Spring finally seems to have arrived in the UK over the last couple of weeks, but its belated appearance nearly proved rather costly. Official figures released today have shown that the UK has only just avoided a triple-dip recession. However, the persistent cold weather in March – which was the coldest since 1962 over much of the country – is likely to have suppressed economic growth.

    When there is an extended spell of cold or wet weather, consumer activity can be depressed as many people decide to stay at home. This is particularly the case in the first half of spring when many people will be itching to get on with the gardening, painting and decorating. Given how cold March was it is not surprising that many people decided to stay in and wait for the weather to warm up.

    It is interesting to note how many post war downturns in the economy have also been accompanied by cold periods of weather. The prolonged cold and snowy winter of 1947, which lasted from late January to mid to late March, exacerbated the harsh austerity conditions in the wake of the Second World War. This was compounded when the resulting floods – triggered by a combination of rapidly thawing snow and heavy rain – caused extensive loss of life and economic devastation.

    The “Winter of Discontent” in 1978/9 was accompanied by one of the coldest winters of the 20th Century. During the deep recession of the early 1980s, December 1981 was one of the coldest and snowiest months on record. Further on, February 1991 was intensely cold for 2-3 weeks and much of the country saw some significant snowfall, which only slowly melted. This was thought to have contributed to the general economic downturn of the early 1990s.

    More recently, GDP figures fell by 0.5% in the final quarter of 2010, which was almost certainly down to the incredibly cold and snowy conditions which persisted through the last week of November and nearly all of December. It was estimated by economists that GDP figures would merely have been flat without this exceptional weather.

    It should be noted that cold spells of weather, such as the ones mentioned, usually only have temporary effects on the economy (although the unfortunate events of 1947 would probably have had a more medium term effect). A period of weather-induced economic inactivity tends to result in a pent-up demand for goods and services, which is eventually satisfied, especially so when fine weather arrives to our shores.

    By: Gareth Harvey