The Arctic blast that may have cost British businesses £1.2bn

• Estimated one in five workers did not go in • Up to 3,000 extra companies may fail
David Teather and Graeme Wearden
The Guardian, Tuesday 3 February 2009

London's Canary Wharf has seen 15cm of snow. Photograph: Jonathan Bainbridge/Reuters
The arctic weather that struck Britain yesterday could cost the UK economy about £1.2bn, piling further difficulty on firms already struggling in the recession.
The Federation of Small Businesses estimated that one in five commuters did not get to work, leaving many companies with a reduced staff. Some shops and bank branches were shut.
In the City many dealing rooms were half-empty, and trading on the stock market was thin. Trader David Buik of BGC Partners described it as "moribund", comparing it with the mood on Christmas Eve. In the circumstances, some City workers took the opportunity to make snowmen in Paternoster Square.
The federation calculated that the 20% of staff not at work will cost British firms £1.2bn, based on £6bn for a bank holiday.
Douglas McWilliams, chief executive of the Centre for Economics and Business Research, said that, especially if the cold continues, an extra 2,000 or 3,000 firms may go bankrupt in the first quarter. "If it leads to delayed payments, the combined hit on profits and cashflow could send many businesses who might be close to the brink into premature bankruptcy. Many are in retail and construction, sectors likely to be most affected by snow and transport disruption."
One uncertainty is how much the damage is softened by the internet; many people will carry on jobs from home, or shop online. The centre suggested a 20% reduction in productivity would cost £900m, but pointed out some firms actually benefit. "Consumers spend more on heating and on warm clothes, and any accidents or structural damage leads to increased spending on repairs," said McWilliams.
According to him, the extreme cold winter of 1962-1963 cut manufacturing output in February 1963 by 75%, but higher spending on heating meant that, overall, GDP was unaffected.
Industry
Businesses across the south-east with large fleets of vans and trucks were struggling with the icy conditions on many roads. A Royal Mail spokesman said: "We are doing everything possible to keep the mail moving and our people safe. Some deliveries are still taking place and where this is not possible our people are processing the mail to help us ensure we deliver it as quickly as possible."
BT engineers were out on the roads in the freezing conditions. A spokeswoman admitted that the cold snap had stopped some of its Openreach engineers getting to their jobs. "It is particularly challenging in London and parts of the south-east in areas where the roads are impassable because of the snow."
Many of its managers and support staff were working from home, which is a regular occurrence for tens of thousands of BT's 110,000 workforce.
BP said it had experienced some problems with petrol deliveries in the south-east of England but none anywhere else in the country.
Transport
Large swaths of Britain's transport infrastructure were shut down or operating vastly reduced services yesterday and Heathrow airport suffered its worst day since the aftermath of the September 11 attacks. Motorists endured miles of tailbacks on motorways and thousands of rail services were delayed or cancelled. Some local authorities were forced to ask the Highways Agency for grit after their supplies ran out.
Rail journeys in and out of London, which account for more than two-thirds of all services in Britain, were badly affected by the freezing conditions and lack of staff. Bus and tube services in London also suffered mass cancellations.
Network Rail said bad road conditions had stopped train drivers, signallers and maintenance staff from getting to work. One of the worst affected franchises, the London-to-Brighton Southern service, said frozen points and tracks had been the main cause of massive disruption.
The Highways Agency, which maintains motorways and major A-roads in England, said it was satisfied with its response and had deployed gritters on roads over the weekend and yesterday morning. "It has been a busy and difficult day but we do not feel that we have been caught out," said a spokesman.
Retail
Retailers were hard hit as staff struggled to reach work and shoppers opted for snowball fights rather than bargain hunting.
Marks & Spencer closed 75 stores in London and south-east England because of staff shortages. The Marble Arch store in the West End closed early so staff could get home, while the early finish meant a branch near Victoria station could supply unsold cakes and sandwiches to nurses at nearby St Thomas' hospital when their delivery did not arrive.
Most shops at the new Westfield shopping centre in west London were closed, reflecting the picture at malls around the capital. At 3pm only six stores out of 265 were open. The centre closed at 5pm but promised a standard 10am-9pm today.
In the supermarkets, Asda reported a 40% leap in sales of Ribena and Vimto and a 10% pick-up in whisky sales. Tesco launched Operation Snowplough to ensure soup, pies, custard and brandy, as well as scrapers and thermal socks, were on the shelves. It was, a spokesman said, "easily the biggest operation we have mounted in nearly 20 years". At Sainsburys sales were up for "classic British ready-made meals such as bangers and mash," said a spokeswoman.
Councils
Local authorities in the south and Midlands yesterday insisted essential services were maintained despite the snow that left millions of workers stranded at home.
Meals on wheels services were given priority, together with the work of core social work teams, said the Local Government Association, which represents 500 councils in England and Wales.
In many cases staff struggled to work only to find health and safety considerations forced them to suspend their work. Refuse collection was abandoned by most councils along with parking enforcement once it became obvious the roads would be treacherous and staff could be in danger.
Thousands of schools and hundreds of libraries, including the British Library, closed after staff phoned in to say they were unable to travel to work.
Insurance
Shunting and skidding prompted a doubling in car insurance claims yesterday, while calls to breakdown and recovery services rocketed as drivers failed to cope with the worst road conditions - in the south-east at least - for more than a decade.
The AA said it received around 16,000 calls, compared with 11,000 on a normal day. The RAC said it took 2,000 calls in one hour, but some parts of the country were "eerily quiet" as drivers heeded widely-broadcast appeals not to take to the roads.
Insurance claims for minor collisions soared as drivers slid across icy roads. The AA said claims were double normal levels. "On a normal Monday we receive around 1,600 claims but by 10am we had already received 500. We expect to have received as many as 3,000 claims by the end of the day," said an AA spokesman. Norwich Union added that it had seen a 40% surge in claims yesterday.
Media
They may be reporting on the weather, but media companies are also caught up in the story as they battled with inclement conditions across London and the south-east. Newspapers pulled copy deadlines forward to mid-afternoon yesterday in anticipation of further bad weather, which will slow their delivery trucks to a snail's pace overnight. The Times, for instance, will have just one edition today while the Daily Mail made its deadline so early in the day that many reporters filed and went home after lunch. But at least they got lunch. Journalists at News International's Wapping headquarters went hungry after the snow left its canteen without supplies.
Sky News anchor Colin Brazier, meanwhile, walked four miles yesterday morning from his home in Twickenham to the satellite broadcaster's Isleworth centre for his mid-morning show.