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Tony Levene is a renowned financial journalist, who has previously been a columnist for Guardian Money. He has written several books, including 'Investing for Dummies' and won the ABI Lifetime Achievement award and the Headline Money award.

 

The long winter of 2013


By the time you read this, you may well be soaking up the spring sunshine. And the freezing snow and the biting winds of winter may seem just a bad dream.

But for a huge number of businesses and for the economy in general, shrugging off what was for most the worst winter in decades is far from easy. The weather, especially unpredictable in our islands stuck between Eurasian land mass and the Atlantic ocean, continues to exert a primeval influence on our finances. 

This can range from the “big freeze is costing billions a day” headline to a potential bonanza for gas and electricity suppliers and suppliers of
hats and gloves.  

It's too early for numbers for this winter's weather-effect

In fact, it's best not to trust any figures published too soon. These can be meaningless. The 2011 winter was hard as well. One well publicised figure put the cost at £260m a day – another almost five times as much at £1.2bn. They may have measured different aspects but both are almost certainly wrong. They ignore any subsequent catching up. 

Quotation MarksThe cold snap was good news for road repairers as it created more potholes.Quotation Marks

This winter, some businesses lost out substantially.

Easter was cold as well as early so weekend break destinations lost out. Running a seaside hotel with no guests is pure loss. Garden centres which expect Easter to kick off the year had few customers. And who wanted to buy spring wear when still clothed in their warmest
winter gear? 

The BDO High Street Sales Tracker, which looks at non-food shopping in medium sized store companies (it ignores small shops and national chains) estimates sales in freezing March 2013 were 0.9% lower than in the warmer March of 2012. For many, that small difference could bring misery later this year. 

Business lost in the big freeze has gone forever in tourism – these days can never be recovered. It's been hard on farmers and that could be reflected in higher food prices.  

But many parts of the economy affected by the snow and wind, have only seen a delay. Consumers may have stayed home but they will make postponed purchases later on. 

They will still need pots of paint or new computers. A removals company with vans stuck in snowdrifts will work weekends to clear the backlog – people still have to move belongings from A to B. The same applies to construction. Work very visibly stopped on many sites.

Less noticeably, builders can now put in longer hours to finish jobs on time. This recovery effect is less dramatic as it is spread over weeks or months but cannot be ignored. 

There was a silver lining for some businesses. Besides the obvious shovel and sleigh sales, most homes spent more on heating – good for power company earnings although bad for consumer spending elsewhere.

As out of town shopping became more difficult, high
streets gained.

And local government finances permitting, the cold snap was good news for road repairers as it created more potholes.  

Most of Europe also suffered from an unexpectedly bad winter. A Berlin beer garden, for instance, saw sales plummet 90 per cent at Easter, with the snow ruining many of its outdoor tables and chairs.

And health insurers had to pay out more as policyholders succumbed to the cold. But in the United States, the problem was warmer weather than usual – Florida resorts became less attractive because it was not cold enough
further north.

Economies are the sum total of individual businesses and consumers. The firms have to decide whether the recent harder winters compared with the balmier 1990s and early 2000s is a trend or a blip. 

If it's a trend, then companies have to adapt. It's more than just selling winter tyres and woolly hats. Patterns of life have to change – more working from home, different foods, a shift in leisure activities, better standards of insulation, and greater preparedness from transport firms.  

Winter is inevitable. It's how the economy is made ready for it that counts.

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