According to economists polled by Bloomberg News, Britain’s gross domestic product could fall to 0.7 percent in May. This could lead to a contraction of the economy in the second quarter. According to ING economist James Smith, the temporary slowdown due to the extra day off is a significant reason “why GDP will turn negative in the second quarter.”
This will be the second time in a year that royal events have affected British growth. And the experience of 2022, with additional days off in June and September, suggests the impact is “less pronounced than in previous years,” according to Smith.
For example, GDP fell just 0.1% in the third quarter of 2022, after an extra day around Queen Elizabeth’s funeral in September. This event caused most stores and restaurants to close for a large part of the day.
Sanjay Raja, an economist at Deutsche Bank, expects the extra holiday in May to cut GDP by 0.5 percent, contributing to a slight drop in output in the second quarter. “While sectors such as hospitality and leisure are likely to thrive, other sectors will be affected from the extra day lost,” says Raja. However, a drop in production due to an extra day off is usually followed by a quick recovery the following month.
During Queen Elizabeth’s Golden Jubilee in June 2002, the United Kingdom’s GDP fell by 2.2 percent in that month. In June 2012, production decreased by 1.4 percent due to the celebration of the Diamond Jubilee, and in June 2022, the Platinum Jubilee fell by only 0.7 percent.
