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December 20, 2010    

Bad weather could hurt UK economy

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by Kay Murchie
Bad weather could hurt UK economy

Economists have today warned that the big freeze could hit the UK economy, impacting negatively on growth.

In particular, retailers have been badly affected this weekend by a lack of shoppers, who opted to stay home due to the snow and ice.

This weekend should have been the busiest of the year for retailers but the big freeze has meant consumers have struggled to get to the shops

As a result, shares in major retailers have fallen today with Home Retail Group down 2.6%. Next lost 1.8% while Marks and Spencer fell 1.2%.

In addition, shares in British Airways fell after the snow and ice meant thousands of flights were grounded today at Heathrow.

Meanwhile, according to Global Insight chief economist, Howard Archer, the snow and ice will be a “particularly serious body blow for retailers” who were hoping for big sales this weekend.

“The hit to retailers is compounded in that many are hoping for their sales to be lifted in the final days of 2010 by consumers looking to make purchases - particularly of big ticket items - ahead of January’s VAT rise from 17.5% to 20.0%”, said Mr Archer.

Mr Archer believes there is now “a very real likelihood” that growth could slow.

The cold snap has meant major companies, including Amazon and Marks & Spencer, have been forced to stop taking orders as they struggle to keep up with a backlog of deliveries.

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Tags: airlines, , busiest, , , , ice, , , , , time, transport chaos, weekend