Financial and Business|

Royal Wedding Holiday to Cost UK Economy Billions

Royal Wedding Commemorative Plate, Tankard and PiillboxAccording to the Confederation of British Industry (CBI), the rise in tourist trade and memorabilia sold for the royal wedding of Prince William and Kate Middleton isn’t likely to give the UK the economic boost that the government has hoped for. The group estimates that an extra public holiday, like the one for the wedding, costs the economy £6 billion due to lost output. Despite the spirit of the historic event and the boost it will give to London attractions due to an increase in wealthy visitors, the wedding isn’t the immaculate good news it was thought to be.

In the past, one-time public holidays have had rather lengthy affects on GDP. In June 2002, the British government called for an extra public holiday to celebrate the Golden Jubilee of Queen Elizabeth. Industrial production during the month fell by more than 4%, while services declined more than 2%. Output in both of the markets didn’t return to previous levels for a while, according to official data. Going back further, the economy contracted 1.2% in 1981 when the country celebrated the wedding of Prince Charles and Diana.

Philip Shaw, an economist with Investec, predicts the royal wedding will cut 0.25% off GDP growth for the second quarter. This isn’t very good news since the British economy has been rather flat since September.

However, not everyone is singing to this negative tune. Dharshini David, a business correspondent for Sky News, says the CBI estimate is interesting, but 3 of the 4 bank holidays they are concerned about happen every year. Plus, the cost of the royal wedding is only £1.5 billion if the disruption is spread equally across them. This is about 0.1% of GDP, so the impact on year-on-year growth will likely be minimal once the impact on tourism and other markets are weighed in, he added.

According to Moneysupermarket.com, the average Brit will spend £29 each, amounting to £480 million. Retailers have been hoping for this and expected Thursday to be their busiest day of the year so far while people get what they need for parties. PricewaterhouseCoopers expects £107 million in visitors’ expenditure at London shops. The British Retail Consortium (BRC) also says that the extra holiday will add to how much people spend, as they are given the extra opportunity to shop.

Travel agents, airlines, hotels and other travel companies are also reaping benefits from the royal wedding as tourists jump at the chance to see it. VisitEngland says the £97 billion per year tourism sector supports 2 million jobs, and the event will only boost its economic value. These benefits are expected to continue even after the wedding, as at least some of the 2-3 billion people watching it on TV are going to want to visit London.

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