2012 extreme wet weather 'cost' UK economy nearly £600m

The extreme wet weather of 2012 could have cost the UK economy close to £600m, according to a report by the Environment Agency.

The overall financial cost to businesses was £200m, including £84m in property damage. In total, property damge from flooding cost the economy £277m. The indirect cost to businesses from disruption such as staff being unable to get to work, was up to £33m. Transport and utility disruption cost a further £82m.

There was a flood one day in every five last year, with more than 7,000 properties affected.

Every business affected by flooding was set back by an average of £60,000, but flood defences protected 200,000 properties worth up to £1.7bn to the UK economy.

These figures come as the government’s response to the consultation on insurance in areas of flood risk confirmed that SMEs will not receive access to cover under Flood Re.

The second reading of the Water Bill, which is being debated today in the House of Commons, has a placeholder clause for the Flood Re legislation.

In response to the research ABI director general Otto Thoresen said: “Sustained and targeted investment in flood defences, with the government taking the lead, is essential to keep on top of the UK’s rising flood risk.

“Insurers play a crucial role in not only helping firms recover from the significant and expensive impact of a flood,  but also in offering help and advice to enable businesses to manage and minimise the flood risk.”

In England and Wales, 175,000 businesses are at risk of flooding. The Environment Agency said in the face of more extreme weather, businesses are increasingly coming forward to contribute to local flood defences that would otherwise not get full government funding.  

Around 50% of managers also reported that severe weather caused disruption to their organisation last year, while disruption caused by flooding to transport, communications and utility links in 2012 is estimated to have cost the economy a further £82m.

Director of flood and coastal risk management David Rooke added: “Extreme events, such as the flooding and drought in 2012, are likely to become more frequent and more severe in the coming decades.

“It is vital that businesses plan for weather impacts to safeguard their operations today and in the future. Every £1 spent on preventing flooding saves £8 in repairing damage.”