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The Globe and Mail

How Britain’s record rains have dampened the economy

People wait in the rain wearing wellington boots for the start of the Thames pageant near Tower Bridge in London June 3, 2012.


With the Olympics ahead and some signs of an economic recovery, Britain had hoped to find itself in the spotlight this summer. Instead, the whole country is finding itself in the midst of a perfect storm.

After almost three straight months of solid day-after-day rain, including a downpour on Sunday that dumped a month's worth of rain on much of Britain in a day, it appears that Britain is about to experience its wettest summer in a century – and some forecasters say that it could be wetter than the flooded 1912 summer, making it the soggiest summer since record-keeping began in 1766.

After enduring the wettest April and June in British history (and a May that was far from dry), July is promising to break all records. And, for those hoping for some respite in August, there is little hope: Britain is trapped between high-pressure blocs in the United States, southern Europe and Greenland, which have forced the jet stream southward and held it in position over the U.K., causing relentless rain that will possibly continue through the first half of August, turning the Olympics into an indoor games.

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And it is more than the stoic national spirit that is becoming waterlogged: the water has begun to damage some crucial parts of the economy.

The Festive Fizzle.

The Olympics will go on whether it's raining or not – although the parking lot to be used for sailing events was shut down due to flooding last week, casting the event's weatherproofing and spectator control into doubt.

Likewise, Wimbledon somehow survived, albeit with endless rain delays. And the Queen's Jubilee went on, stiff-upper-lip style, through the downpour. But other major events have not been as lucky, and Britain's tourist industry – second only to its banking industry in economic importance – is feeling the pain.

Flooding has shut down cross-country rail lines for days on end, forcing the cancellation of many events including one of the highly attended Edinburgh Festivals, at least 24 major horse races, and many county fairs. A major music festival in Leeds was cancelled, with 30,000 fans receiving ticket refunds, and the Hyde Park festival, featuring Blur and Madonna, is in jeopardy. While the British Grand Prix took place last weekend, spectators were told to stay away from the major auto-racing event because its parking lots had turned into mudbaths.

Not only is the rain driving tourists away, but it appears to be enticing Britons out of their own country: Online travel agents reported a 20 per cent increase in foreign searches last month.

The Retail Rain Check.

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The nation of shopkeepers had expected this season to mark a retail boom, with the Diamond Jubilee weekend marking the beginning of a season of festive optimism triggering a national buying spree.

But retail figures released Monday showed just how badly the rain has dampened the consumer spirit. Despite a modest sales increase of 0.8 per cent over the same period last year, figures showed that the rain has since clobbered sales. Crucial early-summer sales of outdoor furniture, gardening supplies, barbeques and summer clothing virtually vanished (although, tellingly, sales of alcohol and televisions were higher than usual).

"Sadly the soggy celebrations over the Jubilee weekend itself, which heralded the start of the wettest June on record, were followed by far weaker business for the rest of the month," Stephen Robertson of the British Retail Council told reporters.

This is having a lasting effect. According to a report from PricewaterhouseCoopers, 73 per cent of British stores were discounting prices in June, up from 40 per cent in 2009 and 70 per cent in 2010. Britain's flagship retailer Marks and Spencer was hit particularly hard, with its Tuesday quarterly meeting reporting a 2.8 per cent slump in sales driven by poor seasonal clothing demand – a slump that led to the departure of the chain's head of general merchandise.

The Farm-Flood Washout.

Yorkshire farmers have already reported their least productive growing season in almost 30 years. And the extremely low temperatures, dark days and flooded soil are likely to delay many harvests by weeks and completely destroy others.

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The National Farmers' Union told the Times that "vegetables such as potatoes, cauliflowers, carrots, cabbages and broccoli are rotting in waterlogged fields that are inaccessible to tractors," that sales of lambs and calves have plummeted because they have been eating waterlogged grass (causing them to bloat and become undernourished), and that sheep are going unshorn because they're so wet.

As a result, supermarkets have been forced to import far larger quantities– at higher prices – from continental Europe, North Africa and the United States. This could have an adverse effect on Britain's trade deficit, which had been improving due to increased exports in recent months, but could be hit badly by dependence on food imports.

The Insurance-Claim Deluge.

Just as Britain's fabled insurance industry was beginning to recover from the devastation of the economic downturn, it has been clobbered with vast flood-damage claims. The widespread flooding has destroyed homes, streets and businesses throughout the northeast and southwest of England and parts of Scotland. The Association of British Insurrers has already estimated that the flood damages in the hundreds of millions of pounds – not as high as the billions faced in the floods of 2007, but the rainy summer is still young.

The Construction-Industry Cataract.

In June, the construction industry reported that it had gone into "reverse gear," with its first decrease in activity since early 2009 and sharp setbacks in both homebuilding and civil-engineering projects – – in large part due to the solid wall of bad weather that halted projects throughout much of the month. The result was large-scale layoffs in one of Britain's most important employment sectors. Analysts at Barclays projected a 3.4 per cent fall in the construction sector for the first quarter of 2012.

Given that the construction industry accounts for almost 10 per cent of the British GDP and employs 2.2 million people, a nation of rained-out building sites could be a country in a lot of not-so-hot water.

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