Jubilee celebrations always seem to trigger killjoy op-eds bemoaning how an extra day off will cause a drop in economic output that the economy can ill afford. This weekend's platinum jubilee, marking the Queen's 70th year on the throne, is unlikely to be any different, with Britons getting an extra public holiday on Friday, in addition to the late-May bank holiday which has been moved from Monday to Thursday, creating a four-day weekend for many.
While the historical data show that there is some truth to reports of the negative economic impact of jubilees, the data also show that these economic setbacks have been temporary, with output bouncing back in the following months.
Economic drain or fillip?
This dip-then-rebound trend can be seen in the GDP data for both the Queen's golden jubilee in 2002 and the diamond jubilee in 2012. Monthly GDP declined 2.23% in June 2002, when the golden jubilee was celebrated, and 1.61% in June 2012, the month of the diamond jubilee. In both cases, however, we saw a strong rebound the following month, with monthly GDP growth of 1.55% in July 2002 and 1.85% in July 2012.
If – as seems likely – the UK economy contracts in Q2 this year, the jubilee bank holiday is unlikely to be the primary reason. It will primarily be because people are generally spending and travelling less, following a 54% rise in energy bills from April, sharp increases in the prices of petrol, clothes and food, and higher national insurance contributions for employers and taxpayers.
For some, the platinum jubilee may represent a chance to put cost-of-living concerns on ice for a weekend. Recent jubilees have brought a significant upside for the UK's tourism industry and its services industry, which includes the retail sector and leisure and cultural activities.
In this post-Covid world, this year’s jubilee has the capacity to offer a much-needed boost to UK tourism, as domestic and overseas tourists travel to see jubilee events first-hand.
Who stands to benefit?
The one-off tourism boost ought to be good news for hospitality, leisure and travel businesses that were badly affected by the pandemic. Bosses at companies like Whitbread, which owns Premier Inn, and at pub chains like JD Wetherspoons and Mitchell and Butlers will be among those hoping for a busy weekend. Warmer weather and the extended opening hours are likely to help boost revenues.
Amid reports that 16,000 street parties are set to take place across the UK over the jubilee weekend, supermarkets like Tesco and Sainsbury's should cash in as consumers stock up on food, drink and what some might call, perhaps a little unkindly, jubilee tat – flags, memorabilia, and other branded items. The extra spending will come as a welcome boost for retailers that have been hit by consumers cutting back amid the cost-of-living crisis.
Small businesses could also profit, especially if people choose to make a week of it, taking a few extra days' leave for a mini-break or staycation. Meanwhile, London can expect the double-positive of increased overseas spending from tourists and local residents alike.
Who might lose out?
On a sector-by-sector basis, construction and production are most at risk from the extra public holiday. But if previous jubilee years are any guide, these sectors should enjoy a post-jubilee rebound.
In 2002, the year of the Queen's golden jubilee, the construction sector saw economic output grow in both June and July. A decade later, around the time of the diamond jubilee, construction output plunged by more than 4% in June, before rebounding by 1.45% in July.
Jubilee pros outweigh cons
Although there are economic downsides when we analyse the effects of events like the Queen's jubilee, there are also clear economic advantages, especially in terms of boosting consumption. Moreover, after a pandemic and this year's steep rise in the cost of living, it’s hard to begrudge the UK population celebrating a unique event in the history of the country and raising a glass to a monarch who has devoted 70 years of her life to public service.
While economists may bemoan two days of lost output, the rest of the UK will probably be glad of an extended holiday weekend, especially after a two-year period that most of us will want to forget.
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