The economic cost of the flooding that has hit the UK over the Christmas period could reach nearly £6bn, according to industry experts.
Large parts of northern England have been devastated by rising water levels as heavy downpours have led to rivers bursting their banks in Cumbria, Yorkshire, Lancashire and Greater Manchester in recent days.
Accountancy firm KPMG has estimated that the total cost to the UK’s insurance sector, businesses, individuals, communities and government will be between £5-5.8bn in the long-term.
As much as a fifth of the overall cost could fall on those with insufficient insurance, the accountancy firm warned.
The worrying report into the cost of the floods came as David Cameron was heckled by flood victims as he visited members of the Scarborough mountain rescue team.
The Prime Minister was shouted at by a woman saying: “No more cuts to public services”.
But he defended his record on flood defence spending and pledged to spend "even more" over the next five years.
The calculations are based on previous floods, such as the £3.2bn cost of the 2007 summer floods that hit during Gordon Brown’s first days as Prime Minister.
The estimate is much higher than initial forecasts made by rival accountancy firm PwC, which predicted losses of £1.3bn on Sunday.
Other economists have predicted that the recent flooding will hit Britain’s GDP by 0.2 per cent due to businesses being forced to close, loss of agriculture output, and people not being able to go shopping and travel.
IHS Economics estimated that the real economic cost could be even greater.
Howard Archer, chief European and UK economist at the forecasting firm, told The Independent: “Damage to personal property does not affect GDP growth, although it is obviously a disaster for the poor people involved.
“And GDP measures do not capture the stress that the people/businesses affected incur.”
Given the floods hit over Christmas, KPMG estimated a higher-than normal cost of contents in homes due to damaged presents and food.
An estimated £1bn worth of damage will not be covered by insurance policies, it was estimated.
Businesses have been warned that typical insurance policies do not cover “loss of attraction” and loss of market value. Industry experts urged the Government to step in to fund the gap to ensure communities are rebuilt.
Insurance company AXA told The Independent it has already paid out £1.1m in emergency or interim payments to customers affected by the floods in northern England and have placed 250 people in termporary accommodation.
In Pictures: Floods hit the UK
In Pictures: Floods hit the UK
1/17 Floods hit the UK
Members of Cleveland Mountain Rescue and soldiers from 2 Battalion The Duke of Lancasters Regiment evacuating people from the Queens Hotel in York city centre as the River Ouse floods on December 27, 2015
2/17 Floods hit the UK
Teams in Whalley evacuate villagers from their homes
3/17 Floods hit the UK
A resident of Glenridding, which flooded for the third time this month, surveys the damage
4/17 Floods hit the UK
The River Ouse, York, has burst its banks
5/17 Floods hit the UK
A soldier from the 2nd Battalion, Duke of Lancaster’s regiment helps to sure up flood defences in Appleby, Cumbria, one of the areas worst affected by the floods
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Experts believe the cost of clearing up the most recent flooding could exceed £50m (PA)
7/17 Floods hit the UK
Hundreds of people have been evacuated from their homes in York
8/17 Floods hit the UK
A police helicopter photographed the extent of the flooding in York on 27 December.
9/17 Floods hit the UK
Flooding at Clifford's Tower in York on 27 December
10/17 Floods hit the UK
Flooding along York's Inner Ring Road on 27 December
11/17 Floods hit the UK
Water runs out of the Lowther pub in York on 27 December after the River Ouse bursts its banks in York city centre.
12/17 Floods hit the UK
Flooded streets in Dumfries, Scotland on 30 December
13/17 Floods hit the UK
A car left submerged in floodwater in Newton Stewart, Scotland
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Staff at the Worlds End bar in Dumfries Scotland desperately try to pump floodwater out of the building
15/17 Floods hit the UK
A man stands in the doorway of his cottage in the flooded town of Straiton in Scotland
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Flooding in the village of Aberfeldy, Perthshire, Scotland
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Man wades through floodwater outside a fish and chip shop in Dumfries, Scotland
Justin Balcombe, head of KPMG’s insurance consultancy branch, said: “The scale of the flooding over the last few weeks has seen communities across large sections of Northern England, Wales, Scotland and Ireland severely impacted.
“In 2007 when a similar pattern of flooding hit, total insured claims were £3.2bn, however, we consider that the actual financial impact far exceeded this.
“We are assessing this month’s events through a number of economic lenses, resulting in an initial total cost estimate of £5-£5.8bn.”Reuse content