Across the UK, the coronation of a new British king last weekend has been widely described, including by MPs inside parliament, as a source of national pride.
But was it also a source of national spend — an economic jamboree that could kick-start the economy and put it on a path to stronger growth?
Early indications show that, despite the continuing cost-of-living crisis coupled with soaring inflation, Britons and foreign visitors went on a spending spree over the coronation weekend.
The Centre for Retail Research predicts that when everything is added up, spending on souvenirs and memorabilia, street parties and celebratory meals, extra spending in restaurants and spending by foreign tourists who came to witness the once-in-a-generation event will be £1.41 billion ($1.74 billion).
“The coronation weekend saw a large uptick in retail sales as people flocked to purchase coronation related-memorabilia, bunting, and food and drinks to celebrate the occasion,” said James Hardiman, senior analyst at the British Retail Consortium.
A quarter of a million foreign tourists flocked to London to experience the coronation of King Charles III, spending about £323 million on hotels, restaurants, retail and attractions, according to the Centre for Retail Research.
Supermarket bonanza
It seems to have been a bumper weekend for the supermarkets, as people celebrated with family and friends at home or catered for street parties.
Tesco predicted it had sold “enough bunting to easily stretch from Land’s End to John O’Groats, enough Union Flag bowler hats for the entire population of Windsor and enough patriotic napkins to line the route from Buckingham Palace to Windsor”.
“We know from the most recent royal wedding and queen's jubilee just how much Brits love a royal celebration,” said Maheen Piracha, buying manager for food to go at Tesco.
Rival supermarket chain Sainsbury's said it had seen its best-ever sales of cream cakes, as well as record clotted cream sales.
“With the classic British afternoon tea a popular choice, we sold 2.5 million scones, which is 625,000 packs, and 79,000 jars of Taste the Difference jam, which is a 400 per cent increase year on year,” a representative told The National.
It's all beginning to add up to become the biggest spending weekend in Britain for some time. Figures from the Centre for Retail Research put spending around Queen Elizabeth II's platinum jubilee last year at about £408 million.
“Whether celebrations in local communities, or the increase of domestic and international tourism, the coronation weekend will have undoubtedly boosted parts of the retail and hospitality sectors,” Linda Ellett, UK head of consumer markets, retail and leisure for KPMG, told The National
“Grocery buying for household gatherings or street parties, eating and drinking out, hotel stays, and the purchase of commemorative goods and memorabilia are just some of many examples of knock-on spend that will have come from an event of such national and historic significance.”
Lisa Hooker, leader of industry for consumer markets at PwC told The National: “It was great news for grocery retailers, with people buying some extra treats for this special occasion. Savvy retailers innovated products around this specific purpose — from chocolate corgis to collectable items to remember the day for years to come.”
There is a caveat to the spending bonanza though — Britons tended to “buy in” rather than go out, which was great news for the likes of the supermarkets, as they flocked to buy food and drink, but less so for restaurants and other venues.
On weekends that have a bank holiday like that of the coronation, the hospitality chain Wetherspoons usually records an increase in trade. However, on the coronation weekend, it said business was “slightly less strong, with a noticeably quiet Saturday”.
“There will be a fizz of disappointment after the chain indicated that people preferred to stay at home and celebrate the coronation,” said Derren Nathan, head of equity research at Hargreaves Lansdown.
Cost of carriage
But has all the spending and good cheer surrounding the coronation weekend marched economic growth prospects higher? Or once all the bunting and barbecues have been put away, will it have been a drag on the economy?
Looking at the basic numbers, one could argue it has been a boon for the British economy. Operation Golden Orb, the government's code name for the coronation, is thought to have cost £100 million, far less than the hundreds of millions the event is forecast to have generated in the wider economy.
However, there is a downside in terms of productivity. The coronation weekend provided an extra day off — which means this May will have three bank holiday Mondays, when many Britons did not work.
The extra coronation Monday bank holiday will help drive a 0.7 per cent fall in GDP in May, according to Bloomberg Economics.
“The killer is the bank holiday — that is what detracts from the economic value,” said David Haigh, chief executive of Brand Finance.
“The coronation minus the bank holiday is a net positive.”
James Smith, an economist at ING, said the extra bank holiday is the main reason he is forecasting this year's second-quarter economic growth to be negative.
“The experience in 2022 — extra bank holidays in June and September — suggest the impact has become less pronounced than it was in previous years,” he said.
Deutsche Bank UK economist Sanjay Raja agrees that the extra bank holiday will hold back economic growth in May, which may lead to a dip in gross domestic product in the second quarter.
“While industries such as hospitality and leisure are likely to do well, others will likely see a hit from the additional working day lost,” he said.
Economists are well-versed at calculating the lost productivity due to the UK's bank holidays.
GDP for the three months to the end of September last year saw a 0.1 per cent contraction, following Queen Elizabeth II's funeral, when shops, hospitality venues and many other businesses closed for the day.
Bank holidays less damaging
There is an argument to say that bank holidays linked to royal events are much less of a drag on GDP than they used to be.
“The UK’s experience with bank holidays last year suggests the extra days off had a more modest impact on activity compared to 2002, 2011 and 2012,” said Dan Hanson, economist at Bloomberg Economics.
Using Queen Elizabeth II's jubilees as a yardstick, figures show that successive celebrations of her milestone years on the British throne and the accompanying bank holidays proved progressively less of a drag on the UK economy.
In June 2002, when her golden jubilee celebrating 50 years on the throne happened, monthly GDP fell by 2.2 per cent. In June 2012, when the diamond jubilee was celebrated, GDP fell 1.4 per cent. Monthly GDP fell by 0.7 per cent last June when her platinum jubilee took place.
Analysts say this is probably down to the fact that fewer retailers close their doors on bank holidays than was the case in the past, combined with the rise of online shopping.
“Perhaps it’s because the closure of high-street retail is less consequential,” said Mr Smith.
“The impact from manufacturing has also fallen, and perhaps that’s linked to the way factories operate becoming more complex.”
The latest economic growth figures for the UK, due out on Friday, will contain a first estimate of first-quarter GDP for 2023.
The last batch showed no growth in February and marginal growth (0.1 per cent) in the three months to the end of February.
While the numbers from the Office for National Statistics will not include figures relating to the coronation weekend, it is clear that the UK economy continues to struggle under a combination of stubbornly high inflation, relatively high borrowing costs and a broader cost-of-living crisis.
Nonetheless, the loss of productivity of the coronation bank holiday is viewed by many to be outweighed by the retail and tourist spending spree and some longer-term benefits.
After all, millions of potential foreign visitors watched the event on televisions outside the UK, which the Centre for Retail Research said will “stimulate interest in visiting Britain”.
