Royal wedding to take big slice out of economic cake
The royal wedding is expected to knock economic growth in the UK despite the expected boost to retail and tourism, economists have warned.
The extra bank holiday on April 29 could result in a 0.25% reduction in GDP growth in the second quarter of this year, analysts at brokers Investec said.
Elsewhere, accountancy firm RSM Tenon warned that on average British business loses £6bn in productivity for each bank holiday and could lose up to £30bn in the last two weeks of April.
The wedding comes at a time when the UK economy is struggling to recover as it is faced with soaring inflation and heavy Government spending cuts.
In the final quarter of 2010, GDP went into an unexpected 0.5% decline.
But, the financial impact of the wedding of Prince William and Kate Middleton will be partially offset by a boost to hotel reservations, alcohol sales and souvenir merchandising.
Investec looked at the impact the Queen's Golden Jubilee had on economic growth in June 2002, as the royal celebration also led to an additional day off.
The research showed manufacturing and services output plunged in June of that year, compared with growth in every other month of the year.
Investec said the extra bank holiday at the end of this month was partly behind its downward revision of GDP growth for the whole of 2011, from 2% to 1.6%.
But Howard Archer, UK and European economist at IHS Global Insight, believes the loss to the economy should be modest, saying: "True, many people will take extra holidays around then to get a long break while only having to take a few days' actual holiday from work.
"But that is holiday that would otherwise be taken off sometime else in the year. Some of the activity lost on the day of the wedding will be made up later on."
Businesses have been urged to plan ahead for the challenging final two weeks of the month.
Around 15% of workers are expected to take holidays between Easter and the royal wedding, giving them an 11-day break, RSM Tenon said.
The accountancy firm has urged cash-strapped companies to chase outstanding invoices in the first weeks of April to minimise the impact on their cashflow.
The dent to GDP that the royal wedding bank holiday will cause