Experts put cost of the big freeze as high as £500m

Scotland's huge snowfall could put a £500m dent in the economy, experts fear.

A tractor clears snow in Peebles. Picture: Ian Georgeson

Large parts of the country are still struggling to recover from four days of major disruption which is expected to continue into this week.

Transport networks have been paralysed, while the widespread closure of schools since Wednesday has forced thousands of workers to take time off.

Ministers yesterday triggered the Bellwin scheme to offer councils extra emergency help to deal with the extreme conditions.

Inverness-based economist Tony Mackay said that if output has halved since the snowfall began on Tuesday night, it could cost the Scottish economy nearly £200m a day.

He told Scotland on Sunday: “There has undoubtedly been a negative impact because some businesses have had to close and many people have not been able to travel to work.

“Total Scottish economic output [GDP] in 2017 was approximately £138bn, which is equivalent to about £377 million a day.

“If the bad weather caused a 20 per cent reduction in output, that is equivalent to about £75 million a day. Three days of bad weather is about £225 million.

“If you assume a 50 per cent fall in output, the daily loss will have been about £189 million and three days about £565 million.”

Economist John McLaren, of the Scottish Trends website, said: “An impact of somewhere between 20-50 per cent seems about right. A range of somewhere between £300-700m is reasonable.”

He said shops, hotels and restaurants were among those likely to have been most affected, along with transport operators and the construction industry.

He added: “The Scottish impact is likely to be greater than for the UK due to the more extreme weather and longer timescale.”

Diane Wehrle, insights director of retail analysts Springboard, said: “The severe weather has taken a huge toll on footfall in retail destinations in Scotland, with a drop of around 30 per cent between Monday and Thursday compared with the same days last year, and as much as 59 per cent on Thursday.”

Sebastian Burnside, senior economist at the Royal Bank of Scotland, said: “Customers cancelling and postponing trips out are unlikely to hit the shops, bars and hotels any harder once the thaw sets in, so this is demand that’s lost forever in many cases.”

Glasgow Chamber of Commerce chief executive Stuart Patrick said: “Smaller operations, particularly in the hospitality sector, may never recuperate the shortfall. There is also the impact of disruption on big events which are difficult to reschedule, like concerts in the SSE Hydro.”

The Federation of Small Businesses Scotland urged bigger firms to help those struggling in these conditions.

Spokesman Stuart Mackinnon said: “Big business should give its supply chains some flexibility to avoid any firms being faced with going over the edge because of the extreme circumstances.

“In many town centres, any businesses relying on passing trade will not have had a good week. Café customers are not going to order five cups of coffee when they return.

“There has not been a lot of construction activity either and I don’t think that will get started for some time.

“Schools being closed will have had a huge impact on the wider workforce as parents have to take time off work.”

Charities have also been hit, with Marie Curie fearing it has lost £25,000 because of cancelled collections at the launch of its Great Daffodil Appeal on Thursday.

However, Howard Archer, chief economic advisor to the EY ITEM Club, warned against being overly pessimistic – despite predicting the UK’s GDP could fall by up to 0.2 per cent if the severe weather persists.

He said: “There will obviously be a significant hit to economic activity from disruption resulting from the severe weather.

“However, we are wary of putting a hard figure on the total cost to the economy and it is also important to bear in mind much of the lost activity will eventually be recouped.

“The increased ability of workers to work from home limits the hit to the economy, as does shopping online.”

Finance Secretary Derek Mackay said all local authorities could apply for financial assistance under the Bellwin scheme after Scottish Borders Council requested it.

He said: “This support will help councils deal with any immediate and unforeseen costs resulting from the recent heavy snow falls and ongoing cold weather.

“Although we expect to have seen the worst of the severe weather, we’re aware there remains a flooding risk in some areas as the snow melts.”