Firms threatened with closure
£700m cost of storm damage to Scotland’s economy
Storm damage over the last few weeks is likely to cost the Scottish economy up to £700 million, it has been claimed.
The three big storms – Desmond, Eva and Frank – together with unprecedented rainfall has left many businesses devastated and some will fail to recover, particularly those which were not insured.
Mohammad Khan, general insurance leader for PwC, said the poor weather had resulted in the worst damage in the UK since the 2007 storms.
“It may well be that as more rain falls, we could even have more damage than the 2007 storms. Storms Frank and Eva were particularly hard on Scotland in particular and it is still difficult to ascertain what the full financial impact of the storms and the rainfall from this will be,” he said.
“However, based on our current estimates, we estimate the economic losses to Scotland from the December and early New Year weather to be between £350m and £700m and the insured losses to be between £175m and £350m.
“This compares with a total UK economic loss of between £2 billion and £2.8bn and insured UK losses of between £1bn and £1.4bn.
“Unfortunately, it’s clear that many small businesses were not covered for flood damage and these businesses have been left exposed to the impact of further flood damage. Small businesses that were not insured in these areas will have to pay between £35,000 and £100,000 on average to repair the property damage caused by the floods. This of course does not include the cost of replacing damaged stock or items for sale.”
Closing doors early, power outages, encountering road closures that delay or halt deliveries as well as employees taking time off to care for children should schools be impacted after the holidays, certainly won’t make life any easier for Scotland’s business leaders, according to PwC.
Martin Cowie, private business leader, PwC in Scotland, added: “With more rain forecast in January, it appears there is little relief in sight for many Scottish businesses and households, particularly those in the North of Scotland, Perthshire and Dumfries & Galloway where the impact from Storms Desmond, Eva and Frank have been keenly felt.
“While some Scottish businesses could find themselves impacted by ongoing road and rail closures in the short term, for example, what we’ve seen from previous extreme weather events is that much of the productivity lost is actually made up fairly soon after. For some businesses, however, the losses they experience will be permanent – if someone has cancelled hotel or bed & breakfast accommodation, a restaurant booking, or not gone to the theatre or the cinema, then that money will be lost.
“Preparation is of course everything and it is important that businesses act now to ensure they can continue to deliver their most critical services. While some businesses may be robust enough financially to take the hit, others may well be teetering on the edge and for them, any new severe weather events may well push them over the edge.”