On the icy road to recovery Britain yearns for a change in the weather

January is normally the month when businesses get cracking again following the lull that settles in during the pre-Christmas wind down period. But the big freeze that descended upon the country in the week before the holiday has wreaked havoc on businesses across the country and could take some weeks or even months for some to recover from. 

Indeed, with the economic recovery still looking fragile, recent industrial output figures were distinctly underwhelming, the cold snap could not have come at a worse time for many hoping to put a miserable 2009 behind them. In many areas of the country businesses were simply shut down, travel was almost impossible and parents were left with little choice but to stay at home as their children enjoyed extended holidays with hundreds of schools shut. 

There have been various estimates as to the severity of the effect on the economy with the insurer RSA putting the damage to the economy at £690 million a day, or £14.5 billion over a three-week period. Indeed, town centres became no-go zones just days after the Christmas rush and January sales had seen shoppers thronging the streets. Although many employees were able to work from home, thus limiting the economic impact, the Centre for Economics and Business Research still says that absenteeism cost business up to £230 million a day and warned that this cost could see businesses that had limped through 2009 forced out of existence. The effect is not yet known but the Centre for Economics and Business Research reckons up to 2,000 businesses could fail prematurely in the first quarter due to the harsh weather, particularly in regions which were hardest hit by the cold snap such as Scotland – with retail and construction businesses most threatened. 

And the FM sector is unlikely to escape from this unscathed such is the reliance across the country on contractors to fulfil many roles and the breadth of the country many FM companies now cover, meaning a certain reliance on the mobility of workers. Considering the recent tough economic climate there may also have been a tendency to spread workforces a little more thinly than previously as costs have been pared back, a tactic that becomes risky when travel becomes nigh on impossible. 

This problem has reared its head already at fit-out specialist Havelock Europa which recently said it would miss profit forecasts for 2009 after floods and wintry weather hit its ability to operate during November and December. In particular its regional business in Northern Ireland and South-west Scotland was hit by the flooding in those areas, meaning contracts were not completed and therefore payments were not booked before the end of the year. 

Of course such problems can be more easily absorbed by the larger players but for companies of the size of Havelock, just a handful of contracts falling behind schedule can seriously affect the ability to meet expectations and in some more extreme cases can threaten a business altogether. It also throws business planning and contingency in sharp relief and in many cases such trials can actually strengthen a business in the long run but such stress tests would not be welcome every year.

Graeme Davies writes for Investors Chronicle