The extra bank holiday on Tuesday 5 June could result in more than 0.5 per cent reduction in gross domestic product (GDP) growth in the second quarter of this year.
The jubilee will come at a time when the UK economy is struggling to recover – and, depending on how well it fares in the first quarter of this year, could again be in recession. In the final quarter of 2011, it declined by 0.2 per cent.
Last year, the extra bank holiday for the royal wedding between the Duke and Duchess of Cambridge was found to have hit growth in the second quarter by up to 0.5 per cent.
However, the financial impact of the jubilee – as with the wedding last April – will be partially offset by a boost to hotel trade, alcohol sales and souvenir merchandising.
Alan Clarke, UK and eurozone economist at Scotiabank, said: “I expect a drag on growth of at least as much as during the Kate and William wedding, possibly more.”
In June 2002, an extra bank holiday was created for the Queen’s golden jubilee.
Howard Archer, UK and European economist at IHS Global Insight, said the impact over the whole year is likely to be modest. He said: “The major cost to the economy is that it is an extra day’s public holiday. In addition, more people than normal may well take off time from work then to have an extended break.”