• The main threats to business activity within London are likely to be flooding and heat.
  • Water shortage may also affect the running of businesses reliant on making industrial water abstractions or discharges
  • Extreme weather is likely to cause disruption to supply chains, staff availability, increased damage to commercial property and business continuity
  • London’s reliance on the financial sector means that its businesses are likely to be affected by global extreme weather events as well as local ones
  • Changes to London’s climate provides opportunities as well as challenges for businesses
  • Tourism is expected to continue to increase in London, but its market share of UK tourism is expected reduce as more people visit other regions

Weather events such as localised flooding, hot summers, heavy storms and cold snaps already effect London’s businesses and economic activity. As the climate changes businesses need to address their vulnerabilities and take action to protect their operations, assets, markets and staff. Whilst climate change presents challenges to London’s business community, it will also offer opportunities.

Loss of productivity

London’s businesses are likely to be particularly impacted by loss of productivity due to overheating. London’s businesses are also expected to face increased energy costs for cooling as they try to counteract this trend.

Flooding impact on mortgage market

Climate change is expected to cause an increase in flood probability to properties throughout the UK, including flooding from tidal, river and surface water sources. As the probability of flooding increases, insurance for properties that flood relatively frequently may be increasingly difficult or expensive to obtain.

If mortgage holders were unable to renew their buildings insurance due to an increase in flood risk, it would leave both lender and borrower exposed to an increased risk of loss and potential invalidation of the mortgage. Whether affordable flooding cover can be retained as a standard aspect of buildings insurance is, therefore, extremely important to the working of the mortgage market and the wider housing market.

The Community Resilience to Extreme Weather (CREW) project has also projected that increase in flood risk due to climate change could have a negative impact on property prices. This may mean an increase in the incidence if people in negative equity with their mortgages in areas that have been badly flooded.

The main impacts in the case of flooding are likely to be disruption to the logistics of transporting and distributing food in the capital. Supply chains operate in a highly complex way, which means that they are vulnerable to interruption.


London is a world tourism destination which sees 26 million visitors annually, worth £11.8 billion to its economy (London & Partners). Modelling predicts that increasing temperatures may cause a shift in the regional distribution of tourists (from both the UK and internationally) under future climate change projections.

By 2080, the general pattern for both domestic and international tourists is that the south of England will have a reduced market share. In the high scenario, the drop in market share is disproportionately high for London, compared to other UK regions. In absolute terms, however, London is expected to have increasing numbers of tourists during the 21st century.

Further information

LCCP’s Resilient Business project is working to improve the resilience of business communities and individual businesses, find out more.