The Environment Agency declared drought conditions across seven areas of central, eastern and southern England on 29 July 2026, covering roughly half the country including London. The affected areas include East Anglia, Hertfordshire and the whole of London, Thames Valley, Hampshire and the Isle of Wight, Devon and Cornwall, and the West Midlands. The declaration follows record-low rainfall and successive heatwaves, with July 2026 recording just 7% of expected rainfall across England and as little as 1% across southern England, with no substantial rain forecast [Source: Environment Agency].
England has experienced three heatwaves this year, including 12 consecutive days of temperatures above 30°C, with a fourth heatwave under way at the time of the declaration. Helen Wakeham, director of water at the Environment Agency and chair of the National Drought Group, said the hot and dry weather means the country 'is using water faster than nature can replenish it' [Source: BBC News]. The UK Health Security Agency has issued amber heat health alerts for the East Midlands, East of England, London and the South East. The Environment Agency also flagged increasing wildfire risk and material risks facing farmers as a result of the declaration.
The drought has direct operational implications for the three water utilities listed on the London Stock Exchange. Severn Trent (SVT.L), which supplies water and wastewater services to around 8 million people across the Midlands and parts of Wales, is at drought level 1 in its North Staffs Water Resource Zone owing to increased demand and storage levels at Tittesworth reservoir. United Utilities (UU.L), a FTSE 100 member serving approximately 7 million people in North West England, has dispatched tankers to several farms in its region to support agriculture. Pennon Group (PNN.L), whose South West Water subsidiary supplies Devon, Cornwall and parts of Dorset and Somerset, is among the companies that have introduced Temporary Use Bans. South East Water, Southern Water, Anglian Water and Affinity Water have also introduced hosepipe bans during July 2026. Reservoir storage across England dropped to 78.8% by mid-July 2026, around 5% below the long-term average for the time of year [Source: Environment Agency]. All three listed utilities are subject to price controls set by Ofwat under the AMP8 regulatory cycle, which determines allowed charges and shareholder returns.
The agricultural sector is facing material pressure. The AHDB's final crop condition assessment rated 58% of UK winter wheat as good or excellent, down from 64% a month earlier. November 2026 new crop UK feed wheat futures stood at £177.75 per tonne, down from £190.25 per tonne at the end of May. Early heatwave impacts on agriculture included rapidly declining winter storage reservoirs, more abstraction restrictions, an earlier-than-expected cereal harvest start, and East Anglia livestock farmers reporting forage shortages [Source: Environment Agency].
The 2026 declaration is the third drought in England in five years, following those in 2022 and 2025. By mid-2025, 14 water companies were in drought or prolonged dry weather status, and the last of the 2025 hosepipe bans were lifted as recently as 5 February 2026. UK temperatures peaked at 37.3°C at Santon Downham in Suffolk on 26 June 2026, the highest June temperature on record according to the Met Office. The Environment Agency states it is acting on lessons from the 2022 and 2025 droughts, with the National Drought Group having been reconvened on 18 June 2026 to monitor risks and impacts. North Wales and the Upper Severn river basin entered drought conditions the week prior to the England declaration, according to Natural Resources Wales.
Sources: BBC News, Bloomberg, Environment Agency, CMC Markets, The Scottish Farmer, Water Industry Hub, Met Office, Severn Trent Plc