Economic benefits to flow through UK as one becomes the royal we

Will the feel-good factor of the Royal Wedding lift Britain's economic spirits?

Britons are in high spirits. They have rarely had it so good during the Easter holiday. There has been a long stretch of sunshine instead of the usual April showers and temperatures have regularly been in the 20s.

The royal wedding tomorrow of Prince William, second in line to the British throne, and Kate Middleton is the icing on the cake. It adds a feel-good factor the UK sorely needs in the face of current financial struggles.

The economic impact is expected to be substantial, too, with analysts predicting the wedding will especially boost the recession-hit tourism and retail sectors, putting an extra £1 billion (Dh6.04bn) into the economy. Everyone wants a piece of the action. Hotels are offering royal wedding packages, a brewery is offering a Kiss Me Kate beer, and jewellers big and small cannot push enough replicas of Princess Diana's sapphire and diamond engagement ring, which Prince William gave to his future bride.

Among companies selling royal memorabilia - tea towels, commemorative mugs, fine bone china tea sets and Kate and William "paper doll kits" - the excitement is almost palpable, with some reporting an increase of up to 40 per cent in sales over last year, mostly to the US.

London alone expects more than 1 million visitors on the wedding day and up to £50 million in tourist spending. If all attend the wedding, the number would dwarf the 600,000 who lined the streets 30 years ago for the marriage of William's parents, Prince Charles and the late Princess Diana.

Tomorrow's wedding is also expected to create television history, with the BBC broadcasting to about 2.5 billion viewers in the US, Asia, Latin America, Europe and the Middle East.

But while the wedding will benefit some businesses, others are not over the moon.

The wedding was a piece of "unadulterated good news that everyone can celebrate", said the prime minister, David Cameron, when the couple announced their engagement in November. He then pronounced April 29 a national holiday so people could hold neighbourhood parties, the traditional British way of celebrating a royal event.

The problem is the timing. Each public holiday typically costs the UK economy £6bn in productivity and overtime payments, according to the Confederation of British Industry business lobby group. But the extra day off, coming between the end of Easter week and the May Day bank holiday, could mean even greater losses. There are only three working days between April 22 and May 2, for which staff are likely to take time off for an 11-day break. Many workers are also expected to call in sick. For a small company, this amounts to a shutdown for the period.

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. It could even knock 1 percentage point off growth this quarter, some economists say.

"The wedding's good for people selling silly mugs but it certainly is not good for my business," says John Newman, who runs a small management company.

With many world leaders and a huge crowd attending the wedding, there are also questions over the cost of security. The government is coy about how much it has to cough up, but the security for the wedding of Prince Charles and Diana in 1981 was estimated to cost about £30m, not adjusted for inflation.

Even though the economic impact is hard to measure the feel-good factor should not be underestimated, some analysts say.

"Extraneous events can increase feelings of economic and other well-being," says Professor Stephen Lea of Exeter University, who specialises in economic psychology.

While many citizens have been directly affected by the recession or fear they will be, Prof Lea believes there are also 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 discretionary spending on items such as electronic goods and home improvements - broader consumption that could lift household spending out of the doldrums, he says.

It would not stop there, others believe.

Along with the queen's diamond jubilee and the Olympics next year, VisitBritain believes the fanfare over the wedding is set to create a "bumper couple of years" for the economy and could be the key to a £2bn tourist-driven economic boom.

And that certainly could not be bad for the economy.