Tuesday 29 December 2015 8:59 am

RSA Insurance and Aviva share prices hit as experts warn Storm Eva could knock 0.25 percentage points off UK growth

As people in Yorkshire and Lancashire spent a second day recovering from once-in-a-generation flooding, experts have warned the damaged wreaked by Storm Eva could hit the UK's GDP growth.

Howard Archer, chief UK and European economist at IHS, suggested the impact could be felt both this year and next.

"Looking at the extent of the flooding, it could well shave 0.2-0.25 percentage points off GDP growth in the near term," he said.

"As the flooding is occurring late on in the fourth quarter, some of this negative impact is likely to occur in the first quarter of 2016.

"This is the consequence of businesses not being able to open, loss of agricultural output, people not being able to get to the shops, travel, etc. 

"There is also the cost to insurance companies… [and] work from those people not actually able to get to work."

Insurers RSA and Aviva were among the biggest fallers on the FTSE 100, after KPMG warned that the floods could cost insurers as much as £1.5bn.

RSA fell 7.6 per cent to 423.3p in the first hour of trading, while Aviva dropped 3.5 per cent to 515.3p.

Meanwhile, uninsured homeowners and businesses likely to be hit with losses worth £1bn, many thanks to the cost of buying cover being too high.

Yesterday environment secretary Liz Truss said a meeting of the government's emergency Cobra committee had agreed to increase the number of troops deployed to afflicted areas to 500, with a further 1,000 on standby. 

The news came as Storm Frank, the sixth named storm of the season, formed in the Atlantic, with the Met Office issuing yellow flood warnings for Scotland and the west coast of England for today, with the possibility of further flooding in the North West tomorrow.