The closure of Heathrow Airport following a significant power outage caused by a fire at an electricity substation is expected to cost the UK economy millions of pounds in a blow to Chancellor Rachel Reeves ahead of her Spring Statement next week.
Europe's largest airport announced early Friday morning that it would remain closed, with no flights landing or taking off until the issue was addressed. The airport confirmed it would resume flights this evening after the mass showdown.
The shutdown grounded both travellers and goods, creating widespread economic ripple effects. As of Friday evening, some flights have started to resume, but the financial impact remains substantial.
The closure has affected 1,351 flights that were either cancelled or diverted to other airports across the UK and Europe. Reeves will outline the state of the country's finances and Labour's fiscal agenda on March 26.
The Heathrow airport fire could cost the UK economy millions pounds in a blow to the Chancellor
GETTY / PA
Nearly half of all UK air cargo was processed through Heathrow in 2023, meaning the closure disrupts approximately 0.13 per cent of the UK's annual cargo in a single day.
According to figures from the airport itself, Heathrow handles nearly £200billion worth of cargo annually, which translates to goods valued at £543million travelling through the hub daily.
The airport is crucial for specific exports including salmon, books and medicine. It also serves as a vital entry point for imported items such as vegetables, flowers and compounds used in medicine, plastics and perfume.
Tourism revenue losses from the Heathrow shutdown are estimated to reach up to £4.8million per day, according to Oxford Economics economist Stephen Rooney.
Do you have a money story you’d like to share? Get in touch by emailing money@gbnews.uk.
Travellers have been left in the lurch following the mass shutdown
PA"In terms of what's at stake, at the conservative end, we estimate a potential loss of tourism revenue amounting to £4.8million per day," Rooney told The Independent.
This calculation is based on typical inbound arrivals volumes through Heathrow and the average daily spend of those travelling.
More than a third of international arrivals to the UK come through Heathrow, providing a basis for estimating the potential loss in arrival volumes.
Rooney noted that some factors, such as travellers spending more while stranded, could partially mitigate these losses.
Airlines and suppliers alone could face costs of "at least" £20million for a day of halted operations, according to travel expert Paul Charles.
The former Virgin Atlantic communications director and current chief executive of travel consultancy The PC Agency highlighted this substantial financial burden on carriers.
LATEST DEVELOPMENTS:
Heathrow Airport closed is closed until midnight tonight LONDON FIRE BRIGADE "These estimates do not touch on the potential loss of earnings of airport and airline staff, lost income for airport retail and numerous other ancillary services such as airport taxis," Rooney explained.
Insurance payouts and costs to affected passengers would further inflate the economic damage. The Centre for Economics and Business Research previously estimated Heathrow contributes £12.88million daily to the economy.
Sree Kochugovindan, senior research economist at global investment company Aberdeen, described the disruption as "immense" but "temporary".
"Heathrow is a major hub for passengers and cargo transport, including high value, time sensitive and perishable goods," Kochugovindan said.
