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Sean O'Grady: Inclement for the economy, but with some bright spots

Analysis

Saturday 11 June 2011 00:00 BST
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A prolonged drought would indeed be bad for the British economy, for two reasons.

First, it would make the inflation spike that is already coming our way even sharper as shortages of items such as potatoes would push their price higher. Some food could be imported to make up for lost domestic production, but that will merely worsen the trade deficit.

Second, the dry weather will put back the economic recovery, already somewhat sluggish. Lost production is the most obvious reason, and in the long hot summer of 1976, for example, some £500m worth of crops were destroyed by the time the rains returned.

Still, agriculture represent only about 2 per cent of GDP, and it would have to take quite a hit to affect things more broadly, although rural areas would clearly suffer.

Conversely, some activities that do better in fine weather, such as construction, pop festivals and trips to the seaside, ought to enjoy a bit of a boost.

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