Freeze costing the economy €500m a week, warns expert
Published 11/01/2010 | 05:00
THE big freeze is costing the economy more than €500m a week, according to a leading economist.
Retailers are taking the biggest hit as consumers avoid the dangerous roads and slush and muck of the high street during what is normally the most lucrative period of the year.
And with more bad weather forecast, the freezing conditions could not come at a worse time as public-sector wages are slashed and visa bills trad-itionally arrive near the end of the month.
Friends First economist Jim Power said the cost to the economy was more than €500m a week and could rise above €1bn if the bad weather lasted.
The Irish Small and Medium Enterprises Association (ISME) said the economic cost could be even higher as up to €130m a day may be lost in productivity to businesses, mainly due to absenteeism.
Chambers Ireland called on the Education Minister Batt O'Keeffe to consider reviewing his blanket closure of schools on a daily basis.
"It's obviously difficult to be scientific about the loss to the economy, but I would estimate that the combined cost is at least €500m a week," said Mr Power.
"This is a serious economic dislocation. Consumer spending in particular has been significantly reduced because people are not getting into shops and it has been a disaster since New Year's Eve.
"The first couple of weeks of January are normally a lifeline for retailers every year and it is not as if people are likely to postpone their spending. It is more likely they will cancel it."
He said the €500m economic loss was also due to increases in household heating bills for people on over-stretched incomes, and loss in productivity to firms due to workers coming in late or not at all.
The €500m figure also takes into account the impact of the weather on public transport, distribution by trucking companies and airport closures.
Deputy chief executive of Chambers Ireland Sean Murphy said the fact that more than 90pc of commercial goods were carried by roads would have a negative impact.
But he pointed out that the retail sector had some hope of a bounce back due to renewed consumer confidence before Christmas, which was evident in VAT and excise figures.
He also called on the Department of Education to re-examine its decision to close schools until Thursday.
"Working couples are struggling to make alternative arrangements, but is there a case for shutting every school in the country, particularly within the M50 or Cork city?" he said.
ISME head of research Jim Curran said many small businesses had seen up to 20pc of staff absent because of the weather and the need to mind children due to the school shutdown. "Absenteeism could be costing up to €130m a day in lost productivity," he said.