Cost of Foot and Mouth to business considerable, says IoD http://www.iod.co.uk/footmouth.html

The Institute of Directors said today that the costs to the economy of  the current Foot and Mouth Disease epidemic could be considerable.

In a recent survey (conducted the week beginning 9 April) of nearly 600 IoD members, 35 per cent said that their businesses had been affected by the FMD epidemic. So far the average, un-weighted, loss of profit for these affected respondents was over £50,000. This would rise to nearly £125,500 if the outbreak went on to the end of July.

Over 50 per cent of large firms (more than 250 employees) said they were affected compared with 38 per cent of medium-sized firms (20-249 employees); 31 per cent of small firms (10-49 employees); and 28 per cent of micro firms (0-9 employees). For large firms the average loss so far (for those affected only) was £200,000, rising to nearly £500,000 if the outbreak continues to July. The equivalent data were £17,500 and £40,000 for medium-sized firms; £21,500 and £60,000 for small firms; and £18,500 and £35,500 for micro firms.

The most heavily affected sectors were agriculture (although the IoD has few members in this sector); hotels, restaurants & distribution; and transport & communication. The most heavily affected areas included the North East and Wales with the South East (including London) the least affected.

Crudely grossing up the estimates for losses for the whole economy gives a total loss so far of £20bn (2 per cent of GDP) rising to £40bn (4 per cent of GDP) if the outbreak were to continue to the end of July. These averages are weighted by size of firm and allow for those not affected. The IoD, however, cautions against the use of such data because the sample was self–selecting (it is likely that far fewer than 35 per cent of total UK firms have been significantly affected by FMD) and the composition of the IoD's membership does not exactly mirror that for the economy as a whole. Using independent estimates the cost to the economy is likely to be less than a quarter of these crude grossed up estimates.

The survey also asked for IoD members' comments on and suggestions for handling the FMD outbreak and its knock-on effects on other businesses. The comments and suggestions were many and varied and included:

Ruth Lea, Head of the Policy Unit at the IoD, said:

"The Foot and Mouth outbreak is clearly having a major impact on many businesses – and not just farming. According to a recent survey of 600 IoD members the tourist industry and transport, in particular, are also suffering. Around a third of members said that their businesses were being significantly affected with losses incurred so far averaging over £50,000 rising to nearly £125,000 if the outbreak continues until July. These are not trivial sums. Along with the other economic concerns, such as the deteriorating international situation and the fragile stock markets, the economic situation is certainly not as bright as it was – even 2-3 months ago.

"Our members have made it very clear that they expect support for businesses, and not just farming, that have been badly affected by the Foot and Mouth outbreak. Such support should include payment deferrals and rebates for VAT, rates and other taxes as well as direct compensation for lost earnings and interest free loans. Many of our members were also very critical of MAFF's handling of the outbreak."

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19.4.01

Contact points:
Ruth Lea, Head of the Policy Unit, office tel: 020 7451 3291
Steve Reardon, Director of Communications, tel: 020 7451 2363
Richard Taylor, Press Office, tel: 020 7451 3264, e-mail: press@iod.co.uk

Notes to Editors: The Institute of Directors is a non-political organisation with some 68,000 members world-wide, 54,000 in the UK, whose aim is to help directors to fulfil their leadership responsibilities in creating wealth for the benefit of business and society as a whole. To this end the IoD provides an effective voice to represent the interests of its members to government and opinion-formers, and to bring the experience of business leaders to bear on the conduct of public affairs.