Flooding risks diverge across UK cities, sectors and economies
Severe floods could hit London real estate and slow economic growth
Climate change is making extreme river flooding across the UK more likely and more severe. While impacts will be felt across much of the country, they will be concentrated in areas and industries that are most exposed.
Our geospatial analysis shows that the real estate sector in London would be the most severely affected by flooding, due to the direct cost of damage to the housing stock and the longer-term impacts on property values in affected areas.
Local flooding events also have substantial macroeconomic impacts too, particularly when occurring in metropolitan areas or economic centres. We have modelled these impacts using our Global Economic Model (GEM) to capture the direct and indirect effects of a 1-in-200-year flood event on both the demand and supply sides of the economy. This allows us to assess the severity of the macroeconomic impact, as well as the size and shape of the recovery.
Our modelling suggests GDP could fall by 1.3% at the start of the flood event in 2026, converging only gradually back to baseline over the next five years. The housing market is a central channel for transmitting economic shocks and lowering output, as earnings losses and physical damages outweigh upward price pressure caused by a reduction in the housing stock. The net effect of these pressures is lower house prices over the decade following the flood event.
Download the full report to explore the city-level risks, sector exposures, and economic impacts in greater depth.
