It’s a glorious summer, but we can’t all stand the heat

There are clear winners and losers when the mercury rises, but what of the overall trend? By Tim Wallace and Mason Boycott-owen

Stuffy nights, sweaty offices and crowded beaches: the heatwave is upon us. From a balmy 25C (77F), in Glasgow and Edinburgh to a sweltering 35C in London, for many of us it is a treat. But it is possible that the rising mercury could herald economic harm.

A glance at the average summer economic growth rates in a range of leading economies suggests a loose trend to better performance in cooler nations. While Iceland, Ireland, Finland and Denmark are all reliable performers, Greece, Spain, Italy and Turkey are prone to downturns.

The link between temperatures and economic performance is complicated, however. Countries such as the US are big enough to have a wide range of climates, for instance. And it depends whether a country is hot all year or if it only suffers for one season.

In Spain, for instance, the cities of the south shut down for August as workers seek respite in cooler climes. By contrast, in Singapore year-round tropical heat means workers happily shuttle from air-conditioned train to air-conditioned office.

So what is the overall impact on the economy? Do we win or lose when it comes to this hot weather?

Walking on sunshine

First, the winners. Some are more obvious than others.

Zelica Carr, chief executive of the Ice Cream Alliance, said: “Ice cream parlours are a big growth sector on our high streets – one of the few growth sectors. We estimate that there are now over 1,200 around the country.

“If last year is anything to go by, they will see a doubling of sales on heatwave days. There are up to 5,000 ice cream vans plying their trade and they can do up to 10 times as much business in the middle of a heatwave.”

Pubs expect to sell an extra 1m pints per day in the heat and the British tourism industry hopes to benefit from a hot spell.

“Inevitably Britons will be heading to the seaside as the temperature rises. Once on the beach, piers act as the focal point, the best kind of seaside landmark, the honeypot, with every visitor wanting to sample the delights of walking over the water and catching a cooling breeze on the pier’s deck,” said Dr Anya Chapman of the National Piers Society.

“Many Britons are predicted to take domestic holidays this year in light of a weak pound and Brexit uncertainty.”

Less obviously, sectors such as construction are highly dependent on the weather. A good summer for sunshine means builders complete more jobs. The energy industry can benefit from a heatwave as demand for power for air conditioning rockets.

The 2018 heatwave meant the energy industry had to supply an extra 860MW in the final week of June compared to the previous week – the equivalent to an extra 2.5m households, according to Dr Iain Staffell of Imperial College London, in a report for energy company Drax.

“While the UK is not synonymous with air conditioners, demand rises by 350MW for each degree that the temperature rises above 20C,” he said.

Sunburnt

Naturally not everyone wins. Every extra ice cream might mean one fewer hot chocolate or bowl of soup is sold. The indoor trades perform worst.

William Hill, the bookies, anticipates poor sales volumes: “We imagine people will remain indoors or in their gardens over the next couple of days,” said a spokesperson.

Similarly fewer shoppers want to spend time on the high street in the heat.

Anne Alexandre, at the British Retail Consortium, said: “Unfortunately, the fashion industry may not benefit, as most summer ranges are already approaching end-of-season clearance sales to make room for autumn.” Once these effects play out, the suspicion among economists is that overall the weather has a balanced effect on retail. “There is no strong link between retail sales and the weather, particularly at the total sales level,” says Andrew Goodwin at Oxford Economics.

Stuck indoors

Work is a different matter. The Trade Union Congress cites research showing that the ideal temperature for indoor work is between 22C and 25C. When temperatures reach 28C productivity falls by 5pc. Homeowners feel the heat too. Last year insurance claims surged as dry weather baked the land causing a spike in damage from subsidence, for instance.

Get used to it

As the climate changes, more regular heatwaves could be on the way so workers may struggle every summer. The Lancet Countdown, which estimates the impact of climate change on health, estimates that in 2017 153bn hours of labour were lost compared to 2000 as a result of hotter weather making it impossible or more difficult to work. The Bank of England has warned the financial industry to prepare for change, whether in the volume of insurance claims from extreme weather events or the anticipated shift of investment flooding out of fossil fuels and into renewable energy.

That serves as a useful warning to industry and the Government, according to Laurie Laybournlangton, at the Institute for Public Policy Research, who fears the long and complex chain of events that will affect the economy.

“Higher temperatures may impair the ability to grow food, which increases the risk of bad harvests, which lead to price rises,” he says.

“A fear in the water industry is a very dry, hot summer then heavy rain in late summer or early autumn, driving more flooding. We have got to have the capability to deal with extreme heat then extreme floods.”

A sweaty commute could be just the beginning of your problems.

‘Many Britons are predicted to take domestic holidays this year in light of a weak pound’

‘We imagine that people will remain indoors or in their gardens over the next couple of days’