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However, most analysts seem to agree the extra spending will pump billions into the British economy. As well as creating a sense of wellbeing in the middle of an economic downturn
Ok so now the pomp and ceremony is over and normality has returned, will the Royal Wedding provide a long term boost to the country’s economy? Or was it just a good day out? Will there be a feel good factor or does the country still feel as blue as Tara Palmer-Tompkinson’s outfit?
No consensus seems to have been reached. In truth, even in a years’ time, due to the many differing angles of assessment, it will still be difficult to totally quantify. However, most analysts seem to agree the extra spending will pump billions into the British economy. As well as creating a sense of wellbeing in the middle of an economic downturn. Though, there are some warnings, a likely reduction in the manufacturing and services sectors and, the high economic costs of the additional bank holiday.
Thankfully, PricewaterhouseCoopers (PwC) did the maths ahead of the big day and the figures made interesting reading. They were a projection based on a simple survey so it remains to be seen how accurate they will be. They predict the possible commercial benefit to London from the wedding could be as high as £107m from visitor expenditure alone.
That sum was derived from the 500,000 people expected to descend on Westminster to experience the wedding in person. A further million are estimated to have watched on big screens in Hyde Park.
Overall, it was anticipated that as well as 295,000 Londoners there would also be 560,000 adults from around the UK who planned to travel into the centre of the capital for the day.
Further economic benefits will come from those people spending while they are in London. While 37 per cent of visitors will stay for only a single day, 185,000 people will stay in hotels, 50,000 in B&Bs and 18,000 with friends. Two thirds of the visitors will take advantage of the capital’s retail spots and go shopping. While 58% plan to visit tourist attractions, 60% will go to the pub, 45% to nightclubs and 40% to restaurants. A confident 7% will wish to share the happy couple’s good luck by visiting a casino during their stay.
In retail a huge boost is anticipated throughout the UK as shoppers snap up wedding-related goods to help celebrate. According to a Sunday Times report Asda, Sainsbury’s and Tesco estimate they will have sold 500 miles of bunting. Tesco believes consumers will spend more than £20m on top of their normal May bank holiday expenditure, with many streets parties planned. The multitude of commercial spin-offs extends to hotels offering royal wedding packages, jewellers cannot stock enough replicas of Princess Diana’s engagement ring and a brewery offering a Kiss Me Kate beer! It remains to be seen if there will be a post –wedding demand for Princess Beatrice hats.
Analysts predict the overall boost from the wedding will boost the recession-hit tourism and retail sectors, by a staggering £1 billion.
So everyone is happy aren’t they? Well not quite.
Many companies believe the impact of allowing employees to take the day off for the Royal Wedding will be detrimental to their organisation. In fact, the CBI has estimated the additional cost of an extra Public Holiday is likely to cost the British economy approximately £6 billion in lost productivity. This could be exacerbated as the 29th April lies between 3 other Public Holidays in 11 days. Many workers are also expected to call in sick. For a small company, this could amount to a shutdown for the period. Put into perspective, the total cost is around 1.5% of the UK economy’s overall output for the quarter. Amid rising unemployment, surging inflation and brutal government austerity measures, the extra holiday could not come at a worse time, says the Federation of Small Businesses.
There is also likely to be a further potential hit in the manufacturing and services sector. The research showed, the Queen’s Golden Jubilee in June 2002 when the country also took a day off for a royal celebration, resulted in growth in June plunging compared with growth in every other month of the year.
With many world leaders and a huge crowd attending the wedding, there are also the obvious questions over the cost of security. The government is not releasing figures of the security operation but the wedding of Prince Charles and Lady Diana in 1981 was estimated to cost about £30m, not adjusted for 30 years worth of inflation.
The government will no doubt hope the feel good factor particularly in these times of austerity, and what almost appears to be wave after wave of cost cutting, will be long lasting. It is believed that while many citizens are directly affected by the recession, there are those who are merely affected by the general sense of doom and gloom. Good feelings triggered by the wedding could well motivate this group of people to increase their spending.
So what of future events? A PwC Economist recently stated as well as the benefits discussed, the wedding will be a good indicator of the potential economic benefits of the Olympic games. When more than ten times the number of visitors is expected. Unlike next year’s Olympics, London only has to host the extended population of wedding guests and visitors for a short time.