The forecast follows economic data released earlier this week which showed UK Gross Domestic Product (GDP) growth was weaker than expected in July. With Britain’s economy already contracting in the second quarter of the year, another consecutive quarter of decline would push the country into recession, according to some economists. 1:07 Biden: US ‘not in recession’ according to Federal Reserve chairman and economists Biden: US ‘not in recession’ according to Federal Reserve chairman, economists – July 28, 2022 Researchers at Pantheon Macroeconomics said in a note to clients on Tuesday that they expect the Queen’s funeral bank holiday on September 19 to further weigh on the UK economy. Story continues below ad Specifically, the forecast calls for September’s GDP to fall 0.2% lower than it would have been as a result of the holiday, which will close shops and restaurants as the country mourns the loss of its longest-serving monarch. “Following the news of an additional holiday for the Queen’s funeral this month, it is very well balanced as to whether GDP declines again on a quarterly basis… thus leading to a technical recession,” Pantheon’s note suggested. 1:02 Trudeau announces that Canada will have a national holiday for the death of Queen Elizabeth II Trudeau announces that Canada will have a national holiday for the death of Queen Elizabeth II The UK bank holiday does not force all businesses to close or furlough their employees, but makes the option available on a case-by-case basis. Pantheon’s forecast used June’s economic impact as the basis for September’s forecasts, as that month had two additional public holidays linked to the Queen’s Platinum Jubilee celebrations. Story continues below ad
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The Queen makes a surprise appearance as her Platinum Jubilee celebrations wind down
Pantheon notes that the impact of the September 19 holiday may be greater than that of June, as some businesses that remained open for the jubilee may “close as a mark of respect” next week. Although the report highlights the risk of a recession linked to the holiday, Pantheon ultimately expects GDP to be flat with second-quarter figures — enough to narrowly avoid a recession in the third quarter. But the UK economy is already on shaky ground heading into autumn, with Capital Economics UK chief economist Paul Dales suggesting in a recent note that the country is “probably already in recession”. The UK is currently facing a cost of living and energy crisis linked to Russia’s war in Ukraine. Prime Minister Liz Truss’ plans to rein in utility costs in October “will help” but will not be enough to prevent the country’s GDP falling in the coming quarters, Dales wrote on Monday. Trending Stories
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The Bank of England has pushed back its decision on the benchmark interest rate by a week to September 22, ahead of the Queen’s death. Pantheon said “recent developments” “strengthened the case” for the central bank to raise interest rates by half a percentage point instead of 75 basis points. Story continues below ad Dales said in his note that he also expected a 50-point move. 6:21 Interest Rate Realities for Your Family’s Bottom Line Interest Rate Realities for Your Family’s Bottom Line
Canadian concerns about economic impact
With Prime Minister Justin Trudeau’s announcement on Tuesday that Canada will also observe a federal holiday on Sept. 19 to mark the queen’s funeral, similar concerns are being raised at home about the impact on the economy. Story continues below ad The Liberal government has designated next Monday as a holiday, but it will be left to the provinces to decide whether workers will take paid time off on Sept. 19. PEI says it will have a provincial holiday, for example, but Quebec has said it won’t. Ontario will also not have a provincial holiday, with Premier Doug Ford instead declaring a “day of mourning” with a minute of silence.
Read more: Ontario will have no provincial holiday Monday to mark Queen’s death
The Canadian Federation of Independent Business (CFIB) urged the provinces not to declare a statutory holiday on Monday, calling the six-day warning for such a move “deeply unfair to small businesses.” “Small businesses are already facing labor shortages and requiring them to close or pay their employees half time without notice would be extremely costly or result in a day’s worth of lost productivity,” said CFIB President Dan Kelly, adding The statutory holiday would “cost the economy billions”.
‘Smaller-scale’ events expected amid ‘fragile economic climate’
There are no official cost estimates for the Queen’s funeral, which is sure to include expenses such as flowers, a military procession and a flight, but journalist and royal researcher Emily Stedman says the Queen’s 2002 funeral is a possible benchmark. about what I should expect. Story continues below ad That event cost about 5.6 million pounds ($13.7 million Canadian dollars at the exchange rates of the time), Stedman says, with 4 million pounds going to security alone. He expects King Charles III’s coronation events to continue to cost “in the millions” but should be “smaller in scale” than ceremonies for previous monarchs. 1:42 Queen Elizabeth II’s coffin is set to be taken to London as crowds of mourners pay their respects Queen Elizabeth II’s coffin is set to be taken to London as crowds of mourners pay their respects Queen Elizabeth II’s coronation in 1953 would have cost about 46 million pounds in today’s terms (C$69.6 million), Stedman says, adding that he expects “a similar amount for Charles’ coronation.” But the UK’s “rather unstable economic climate” could cause the royal family to tone down the grandeur of the ceremony, he adds. “We’re really living in pretty troubling times financially,” he says. “These two events, the Queen’s funeral and the coronation of King Charles, will come from taxpayers’ money that we have funded from the government. So I imagine there’s a lot of concern about the cost of these upcoming events and the impact it’s going to have on the economy.” Story continues below ad — with files from Anne Gaviola of Global News © 2022 Global News, a division of Corus Entertainment Inc.
