The prolific flooding, which has caused devastation across much of the north and north west of England over the past month, could cost the UK economy more than £1.5 billion ($2.24 billion) in economic losses.
According to a report released over the weekend by financial services firm PwC, the economic losses, which includes insurance losses, caused by flooding from Storm Desmond and Storm Eva are already around £1 billion ($1.49 billion), but could increase more than 50% if heavy rain continues to fall as expected.
Mohammad Khan, PwC’s general insurance leader said in the report (emphasis ours):
“After Saturday’s torrential rain, and with rare “danger to life” warnings issued, the economic damage to the UK could be significant.
“It is still early to estimate losses but, based on the areas where significant rain has fallen, the great number of roads submerged and including the losses arising from Storm Desmond earlier this month, we would give a very initial estimate of economic losses of between £900m and £1.3bn ($1.34 to $1.94 billion), with the insurance industry bearing between £700m to £1bn of this. Unfortunately many areas that were affected during Storm Desmond have been flooded again.”
“If rain continues to fall in large quantities, and the areas with warnings in place do indeed flood significantly, it could well be that the total economic losses could breach £1.5bn with an additional significant increase in insurer losses from our initial estimate.”
Flooding first ravaged parts of Cumbria and the Lake District in early December as a result of unusually high rainfall caused by Storm Desmond. Many parts of the county then flooded again just before Christmas, just as clean up operations were starting to take effect.
The UK was then hit by severe flooding again over the Christmas period, with Yorkshire and Lancashire worst hit. In York, the River Ouse rose to five times normal levels, and the Army was called in in some areas to deal with the damage caused by the floods.
Prime Minister David Cameron has already come under pressure to increase spending on flood defences after the devastation, and PwC’s report on the losses caused by the floods could prompt further calls for the prime minister to do more to prevent such severe flooding in the future.
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