The Daily Telegraph Wednesday 24 July 2019 *** 33It’s a glorious
summer, but
we can’t all
stand the heat
S
tuffy 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 thefocal 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.Harley-Davidson profits go into reverse as global trade tariffs bite
By Tim Wallace and Alan ToveyTRADE tariffs were to blame for
plunging profits at Harley-Davidson,
the motorcycle manufacturer attacked
by Donald Trump for shifting produc-
tion abroad to avoid export duties.
Pre-tax profits at Milwaukee-based
Harley fell 22pc to $426m (£343m) in
the first half of the year on revenue 9pc
lower at $2.6bn.
Harley said that industry-wide lower
demand for motorbikes contributed to
the poor performance, with heftytariffs on US-built motorbikes sold in
the EU and China adding to its troubles.
The company has opened a plant in
Thailand to dodge the levies, and
expects this to ease the pain as produc-
tion rises, although winning regula-
tory approval to ship motorbikes made
there had taken longer than expected.
Matt Levatich, chief executive, said
Harley’s “More Roads” strategy to
attract more bikers was paying off,
along with international expansion.
President Trump last year accused
Harley of waving a “white flag” when itsaid it would move some production
abroad as tariffs loomed because of his
trade war with China and the EU.
A combination of tariffs and falling
rider numbers meant Harley sold
129,514 bikes in the first half, down
6.6pc on last time round, though the
declines accelerated in the second
quarter.
As a result, the company cut its fore-
cast, saying it now expects to ship
between 212,000 and 217,000 bikes in
2019, down from the earlier prediction
of between 217,000 and 222,000.Meanwhile, the International Mone-
tary Fund has warned that the global
economy will only recover if trade
wars end and the serious rows between
nations are resolved. GDP growth willbe slower than previously expected at
3.2pc this year and 3.5pc next year, the
IMF said – a cut of 0.1 of a percentage
point for each year.
However, the modest rebound in
2020 will only materialise if govern-
ments stop scrapping over trade and
reach new deals.
“Global growth is sluggish and pre-
carious, but it does not have to be this
way because some of this is self-
inflicted,” said Gita Gopinath, the IMF’s
chief economist.
Governments must urgently addressthese clashes if they want to restore
growth, the IMF warned in its World
Economic Outlook update.
The UK economy is set to expand by
1.3pc this year and 1.4pc next year. The
2019 forecast is a 0.1 percentage point
upgrade from the spring forecast
because the IMF was surprised by the
strength of stockpiling activity in the
first three months of the year as busi-
nesses prepared for the expected
March 29 Brexit deadline.
Some of this will unwind, however,
as firms run down those stockpiles.22pc
Fall in pre-tax profits at the US motorcycle
manufacturer to $426m. Harley sold 6.6pc
fewer bikes in the first half of the yearWoodford pallet company
issues plea for new funding
By Harriet RussellTHE Neil Woodford-backed pallets
business RM2 will ask shareholders for
an emergency $6m (£4.8m) cash injec-
tion later this month after failing to file
its accounts before the end of June.
RM2’s Aim-listed shares were sus-
pended at the beginning of July at 8.5p
after the logistics company failed to
publish its 2018 accounts on time.
Its shareholders will now be asked to
approve the fundraising at a general
meeting on July 31 in Luxembourg. If
investors fail to back the placing, the
company will move ahead with a vol-
untary liquidation, and delist its shares
from the London Stock Exchange.
RM2 designs pallets for the logistics
sector and also offers tracking and sys-
tem management services.
Woodford Investment Management
is the company’s largest shareholder,
with 59pc or just over a third of the vot-
ing rights, giving it the power to block
the potential fundraising. RM2 said it
had “no assurance” that Woodford will
vote in favour of the placing.
In a statement to shareholders, the
board said that raising money through
a placing was “the only viable option”
to ensure its survival. It also said this
method would avoid the requirement
for a prospectus. If the placing is suc-
cessful, the company said it wouldensure enough shares remained in
“public hands” so it could make an
open offer to all shareholders in a sec-
ondary fundraising at a later date to
allow them to preserve their holding.
Woodford’s stake in RM2 has fluctu-
ated in size over time, as the company
has relied on the veteran fund manager
to back other rescue missions.
In March last year, Woodford’s stakedoubled in size to nearly 68pc after
RM2 was forced to raise $32m in two
separate tranches. The company said in
mid-January that a $2m cash balance
would only see it through to the third
week of February.
Mr Woodford is under pressure to
sell holdings in listed investments as he
battles to increase liquidity across his
suspended equity income fund.
Trading in the fund was suspended
on June 3, blocking investors’ access to
their cash indefinitely.
Woodford Investment Management
was contacted for comment.RM2 said it had no
‘assurance’ that Neil
Woodford will vote in
favour of the plan to
raise £4.8m via
shareholdersHeathrow boss: nothing can
halt building of third runway
By Oliver GillHEATHROW boss John Holland-Kaye
believes neither Boris Johnson nor the
Court of Appeal will be able to block
the building of the third runway.
The chief executive of the west Lon-
don airport threw down the gauntlet to
the new Prime Minister, who has previ-
ously opposed Heathrow’s plans.
“It is now government policy and we
are all getting on with it,” he said. “This
is now a done deal.”
After decades of political wrangling,
Parliament backed the Heathrow ex-
tension last year. It is consulting on a
master plan that will see a new runway
built over the M25 motorway.
During the Tory Party leadership
campaign, Mr Johnson softened his
previous staunch opposition without
formally give it his blessing.
In 2015 he had pledged to “lie down
with you in front of those bulldozers
and stop the building, stop the con-
struction of that third runway”.
Mr Holland-Kaye said Mr Johnson
had “been repeatedly asked about it
[the third runway] but has avoided
answering the question”.
On Monday, opponents to Heath-
row’s plans were given the right to
appeal against a High Court judgment
in May that refused to quash the Gov-
ernment’s decision on airport expan-sion. “We just crack on,” said Mr
Holland-Kaye. “The initial judicial re-
view was very clear cut.”
His comments came as Heathrow
posted a 4pc rise in half-year revenue
to £1.4bn. Pre-tax profit was £7m after
the airport suffered a £139m hit from
revaluing some loans. Almost 39m peo-
ple flew from Heathrow in the six
months to June, a rise of 1.8pc. Mean-while, Heathrow is facing industrial
action that the Unite union believes
could “shut down the airport” later this
week in a row over pay.
Heathrow said it will work with air-
lines “to minimise disruption”, adding:
“We are disappointed that Unite will be
taking strike action.”
And British Airways yesterday lost
its bid for a temporary High Court in-
junction to prevent pilots going on
strike over pay. Separately, the GMB
union announced plans to ballot clean-
ers working for outsourcer ISS over
what it called “poverty wages”.John Holland-Kaye
is confident that
the scheme to build
a third runway at
Heathrow will
proceedHotter summers mean slower growth
Average summer temperature and GDP growth (July–September)
2.0
%1.5
1.0
0.5
15 ° 20° 25 °30°
IcelandIrelandFinland
DenmarkNetherlandsNorwaySwedenBelgiumMexicoEstoniaSwitzerlandGermanyUKPolandFranceCanadaPortugal JapanTurkeyItalyUSSpainGreeceTrend line35 °
0
10x
Ice cream sales up
10-times in a heatwave
1m
One million more pints
of beer sold on a hot day
SOURCE: OECD, TIMEANDDATE.COMWell oiled Robots performing at a show to celebrate the
Qingdao Beer Festival, known as Asia’s Oktoberfest, which
begins this week in east China’s Shandong province.AFP/GETTYBusiness
There are clear winners and losers when the
mercury rises, but what of the overall trend?
By Tim Wallace and Mason Boycott-Owen
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 soworkers 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 Laybourn-
Langton, 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 takedomestic
holidays this
year in lightof a weak
pound’‘We imagine
that people
will remain
indoors orin their
gardens over
the nextcouple of
days’РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS