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Britain to shrug off wintry economic chill: analysts

Europeans stock up as no end to cold snap forecast
Berlin (AFP) Jan 10, 2010 - Europe endured weekend weather misery with scores of flights cancelled and key highways cut off as snow blanketed much of the continent, and officials urged people to stock up on supplies. Germany was forecast to receive more snow Sunday after as much as 25 centimetres (10 inches) fell in northern and central Germany on Saturday. "All of Germany is white," said Tania Dressel of the German weather services. Germans were warned to buy enough food and medicines to last for up to four days in the face of a blizzard, and then hunker down at home, avoiding all non-essential travel. The frigid temperatures claimed more lives on Saturday.

A 60-year-old homeless man was found frozen to death in the northwestern French province of Normandy, authorities said. The two latest victims of Britain's coldest weather for 30 years were a 42-year-old woman who died after being found lying in the snow in Newcastle, northeast England, and a woman, 90, who froze to death in the garden of her home in Yorkshire. What is causing the weather havoc in Europe, according to meteorologist Michel Daloz with Meteo France, is a rare combination of factors: a depression over northern Italy bringing relatively warm humid air from the Mediterranean north, where it has met cold air coming from the north and east. Air traffic around the continent faced major disruptions. More than 220 flights were cancelled at Frankfurt, Europe's third largest airport, spokesman Juergen Harrer said, with scores more delayed. About a third of flights were delayed at Paris Charles de Gaulle airport, before air traffic returned to normal later on Saturday.

But in the eastern city of Lyon about 1,000 people were stranded at the airport after numerous flights were cancelled and several planes in the air headed for alpine destinations were routed there. The Red Cross set up cots for the stranded passengers as local hotels were full. London Heathrow airport cancelled 50 short-haul flights and heavy snow led to Dublin Airport closing for four hours, with more than 70 flights either cancelled or delayed. Traffic was backed up on major links like the A5 highway between Germany and France where police blocked off the border road to trucks for several hours due to heavy snow, German traffic police said. In France, significant snowfalls caused major delays to train services, and firefighters in northwest Eure region had to rescue overnight some 130 motorists stranded on blocked roadways, officials said. The Eurostar rail link between Britain and continental Europe said it was operating two-thirds of its trains. In London, the Serpentine outdoor swimming lake in Hyde Park was closed for the first time in about 140 years amid icy conditions.

The conditions knocked out weekend sports games -- seven English Premier League football matches were called off and five out of the six Premiership rugby union fixtures were also cancelled. In the Czech Republic, six workers in the central town of Chrast escaped unhurt when a factory roof collapsed under the weight of snow lying on it. A major highway linking Prague with the western city of Plzen was blocked for several hours on Saturday after accidents. Power outages were reported in Poland where about 25,000 households were without electricity in the southern region of Kielce and Katowice after power lines snapped when snow-laden branches of trees fell on them. In Italy, heavy winds and rain toppled trees in the centre of the country and around Rome, leaving some 65,000 people without electricity, civil protection officials said.
by Staff Writers
London (AFP) Jan 10, 2010
The British economy, forecast to emerge soon from recession, will likely shrug off the most brutal winter in decades as many Britons simply delay purchases and work from home to beat the big freeze.

The Confederation of British Industry (CBI), the nation's biggest employers' organisation, admitted that the cold weather was causing "massive disruption" for companies already suffering from weak demand in the downturn.

The CBI also argued, however, that the economic impact will be mitigated by the growing adoption of high-speed Internet services that allow many to shop or work from the comfort of their own homes.

Economist Howard Archer, who covers Britain and Europe for IHS Global Insight, played down the effects of heavy snowfall and freezing temperatures.

"These things tend not to have as much impact as often feared," Archer told AFP.

"Obviously, the longer it persists the more it will hit retail spending and affect some business activity but these things tend to be made up once conditions return to normal.

"For example, people tend to delay their retail spending rather than cancel it," he added.

With icy conditions making it almost impossible to travel, many people are choosing instead to sit on their sofas, flick on the heating and power up their home computers and laptops.

Consumers will also transfer their spending to other items, said Collin Ellis, economist at Daiwa Capital Markets Europe.

"I would not expect (the bad weather) to have a big impact on economic growth," Ellis said. "Obviously if people are struggling to get to work, that means it may take longer to fill orders.

"But I suspect the most likely outcome may be a further transfer between different types of consumption -- more meals at home versus eating out."

Britain's big freeze will slash around 1.0 billion pounds (1.1 billion euros, 1.6 billion dollars) from the nation's daily economic output, according to forecasts from the Centre for Economics and Business Research consultancy.

However, Keith Pilbeam, economics professor at London's City University, said the true impact on the economy was impossible to quantify.

"Although the true cost of the current wintry weather on our economy cannot be calculated precisely, it will create a number of economic issues," Pilbeam told AFP.

"The full effects of the weather will depend on the severity and duration of the wintry conditions we are currently experiencing."

Profits and sales will be damaged but some businesses will also benefit as more people stay at home.

"For businesses, the reduction in revenues coupled with paying staff who cannot make it to work -- and so are not producing -- will be very damaging to their profitability," Pilbeam said.

"However, the absence of staff from the workplace will benefit some companies, such as utilities, as people stay at home, switch on the television and turn up the heating.

"The widespread wintry weather will mean an increased demand for commodities such as oil and gas, which will lead to higher prices that may prove long lasting," he added.

British annual inflation jumped to 1.9 percent in November because of rising fuel prices, recent official data showed.

CEBR head Douglas Williams warned that some businesses could go to the wall in the bad weather but agreed that the overall impact was limited.

"Don't exaggerate (the) economic impact of the freeze -- much of the lost GDP (gross domestic product) will be made up in the coming weeks -- but some cash-strapped businesses might be pushed over the edge," Williams said.

"But all the past research shows that the impact of extreme weather on GDP is surprisingly small," he said, adding that many businesses were already operating below full capacity because of the recession.

Most analysts agree that the effects of wintry weather will simply be reversed when the big freeze thaws out.

"The wintry spell is likely to have an adverse impact on industrial production as well as a generally disruptive effect on the service sector as three million workers are reckoned to have missed work in the worst affected areas," said VTB Capital economist Neil MacKinnon.

"Obviously, these are temporary effects -- as better weather would simply see a sharp rebound in output and activity.

"The underlying picture of the UK economy is one where there are tentative signs of a gradual move out of recession," MacKinnon added.



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