Holding Back the Flood

Westminster has indicated that it will spend more than ￡2.6bn on UK flood defences over the next two years, in an effort to do more to protect homes and businesses.

This marks a ￡250m increase on the figure previously announced, and is a sharp increase from the previous government that spent an average of ￡1bn a year over the last parliament.

The increase comes against a backdrop which the government has heavily criticised for inadequate action around flood defences.

For example, just over a year ago, the Public Accounts Committee concluded that the government had neither sufficiently maintained its existing flood defences, nor established enough new ones.

In a statement released this morning, The Department for Environment, Food & Rural Affairs, Environment Agency said that “as well as protecting families from the devastation of flooding, the investment supports economic growth by protecting businesses, supporting jobs, and supporting a stable economy in the face of the increasing risk of flooding as a result of climate change. It will also protect farmland which has been badly hit by recent storms, in turn helping to safeguard farm businesses and farmers’ profits”.

Presently, the Environment Agency estimate that 6.3 million homes are risk from flooding, and this figure could rise to as many as 8 million by 2050.

However, it’s not merely households that are suffering from the government’s lack of investment, but businesses too. For example, government data released during 2024 showed that between 2016 and 2019 the “greatest proportion of flood damage was to non-residential properties, accounting for 40% of the total damages.”

Government data also suggests a significant return on investment when it comes to flood defences and prevention. For example, in 2022 the Government released a report indicating that a programme ran between 2015 to 2021 focusing on investment into flood defences represented “excellent value for money, with every ￡1 invested in new flood schemes resulting in around ￡8 of return benefits”. Similarly, a risk management report from the flood and coastal erosion risk management (FCERM) ?said that “economic losses from flooding between November 2019 and March 2020 were about ￡333 million. However, it would have cost an extra ￡2.1 billion without flood defences”.

Outside of the UK and looking at the world more generally, according to the World Meteorological Organisation, some 2.5bn people were impacted by flooding between 1994 and 2013, with the damage being caused by flooding exceeding $40bn each year.

In 2022, PwC estimated that over 40% of the world’s urban population will see an increase in flood risks by 2050. And that same year, they also noted that of the ten most adverse weather events in 2020 and 2021, four involved flooding, with estimated damages of $72.2bn.

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Today in Focus

Outside of markets continuing to monitor developments from the Oval Office, particularly in relation to tariffs, participants will be focusing on economic data releases today. This includes PMI releases from the Eurozone, UK and US where markets will be looking to gain further insight into the health of the private sector across these economies.

At 13:15, markets will also be hotly anticipating the release of ADP employment figures from the US, ahead of US labour market data on Friday (which includes the all-important nonfarm payrolls). 10:00 this morning will also see the release of PPI figures from the Eurozone, in the wake of the ECB’s rate cut last week.

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