The UK eagerly anticipates not only three bank holidays but also the once-in-a-lifetime Coronation ceremony for King Charles III. With an extended weekend and pubs allowed to stay open for longer, it should be a joyous occasion. How will these celebrations affect the UK economy?
The Coronation weekend promises to bring a much-needed boost to consumer-facing sectors that have been suffering from the ongoing cost-of-living crisis. Pubs, an integral part of any British celebration, are set to enjoy a double whammy increase in spending.
The extension of pub closing hours from 11 pm to 1 am across the weekend will be the first benefit. This would boost spending on any given weekend, but the special occasion of the Coronation itself should likely compound this by providing a special spending buzz, not unlike that seen during major events such as the Football World Cup.
Reserach group Cebr estimates that the impact of longer opening hours and the special occasion of the Coronation will lead to a £104 million boost to pub spending over the Coronation weekend.
The tourism sector is poised to reap the benefits too. The Coronation will attract people from far and wide to witness the unique occasion. VisitBritain reports that flight bookings for May from US citizens are already 10% higher now than in 2019.
Using official Office for National Statistics (ONS) data, Cebr estimates that this will add £44 million in spending from US visitors to the UK economy in May 2023. Assuming that global visitors show as much interest in the Coronation as Americans, this figure would rise to £233 million.
This rise in visitors for the Coronation will not only boost spending, but also support an important sector of the UK economy. Cebr’s research for ABTA showed before the pandemic tourism in the UK supported 1.5 million people or around 4.8% of total employment, while inbound tourism directly generated an estimated £10bn in Gross Value Added (GVA) contributions across one year.
More recently though, tourism has lagged pre-pandemic levels. The latest data from the ONS show visits to the UK from overseas residents were down 8.9% or 917,000 in Q4 2022 compared to Q4 2019. The Coronation should help reignite the spark for the sector, helping support jobs and activity over the summer.
Of course, the flip side to a bank holiday (from an economic perspective) is that a large segment of the population won’t be working. The ONS speculates that around half of the 0.6% monthly contraction in GDP last September could be attributed to the one less trading day induced by the funeral of Queen Elizabeth II.
Importantly though, this period saw no typical bank holiday shift towards leisure and tourism activities, due to the mourning period and widespread nature of business closure. So any impact on output would certainly be less pronounced this time around.
Besides, any initial negative impact from an extra day off could very well be made up by some workers and businesses over the course of the year. A recent UK-wide study of over 60 companies trailed a four-day working week between June and December last year.
The results showed that most employers saw productivity levels maintained, while staff retention and well-being were boosted. Our own figures from a previous Forecasting Eye. estimated a four-day week could even boost productivity, though this was heavily dependent on the sector. With three bank holidays in May, the UK might be unwittingly undergoing its own trial of the four-day working week.
About the Author: Benjamin Trevis is an Economist at Cebr.