According to economists surveyed by the Bloomberg news agency, UK GDP could fall to 0.7 percent in May. That could cause the economy to contract in the second quarter. According to ING economist James Smith, the temporary slowdown due to the extra holiday is an important reason ‘why total GDP will be negative in the second quarter’.

It will be the second time in a year a royal event has weighed on Britain’s growth. Experience in 2022, with the extra days off in June and September, suggests the impact will be “less pronounced than in previous years,” according to Smith.

Production decline

For example, GDP fell just 0.1 percent in the third quarter of 2022, after the extra holiday around Queen Elizabeth’s funeral in September. The incident caused most shops and restaurants to close for most of the day.

Deutsche Bank economist Sanjay Raja estimates the additional holidays in May will reduce GDP by 0.5 percent, contributing to the small decline in output in the second quarter. “While sectors such as hospitality and leisure are likely to thrive, others will take a hit from the additional workdays lost,” Raja said. However, production declines due to additional holidays are usually followed by a quick recovery the following month.

Smaller impact

According to economist ING Smith, the fact that royal events appear to have less of an economic impact than in the past may be due to the closing of shopping streets having less consequence. For example, more online shopping and more physical stores are staying open than ever before. The impact on production also decreased.

During Queen Elizabeth’s Golden Feast in June 2002, GDP fell 2.2 percent that month. In June 2012, production fell 1.4 percent due to the Diamond Jubilee celebrations and in June 2022, Platinum Jubilee fell only 0.7 percent. In September last year, the month of the Queen’s funeral, GDP also fell 0.7 percent.