WON’T blame it on myself, I’ll blame it on the weatherman”. So sang rubbish Irish girl group B*Witched in their 1999 number one hit. Over a decade later business leaders are following their lead.
In December it snowed in the UK. In January we heard that people bought fewer Airfix models and drank less beer.
Nationwide fourth quarter retail sales were flat, representing the worst Christmas showing on record, apparently because of the weather.
I can’t help but suspect some businesses are leaning a bit too heavily on this excuse. Even with the snow effect, what happened to the expected uptick in retail ahead of the January VAT rise? Did we over-estimate the strength of the recovery to start with? Or what?
To be fair, it was particularly cold in December, and parts of the country shut down completely, but we’re not talking about a natural disaster here. After a few days the snow melted and we were back to normal. And the quarter is still three months long.
A natural disaster has a more permanent effect – altering the productive capacity of the country affected.
Australia’s floods washed away crops, closed mines, ruined homes, business premises, roads and railways. Reconstruction will cost vast amounts of money and will require extra tax to pay for it.
Notwithstanding the death toll and the human impact on those left to rebuild, the floods are estimated to trim Australia’s growth by half a percentage point this year.
Compare that to the UK. A few days of snow turned an expected fourth quarter growth story into headlines of the economy actually shrinking by 0.5 per cent. The Office of National Statistics stopped short of blaming it all on the white stuff, adding that the figure was “significantly affected” by weather – it said it knocked 0.5 percentage points off GDP.
The test comes with indicators that fall outside the environmental effects. For instance, December mortgage approvals fell to a two-year low. Surely that’s nothing to do with snow?
And consumer confidence in January was the lowest in two years.
If we really did see a big impact from the weather, the figures will rebound instantly. And it will be interesting to see how much of the leftover demand will appear in January’s retail figures.
B*Witched never had another number one after they blamed it on the weatherman. Businesses take note.
Rebecca Meehan is an anchor at CNBC