News Item: Queen’s funeral set to knock UK economy after rebound
The UK’s recession-threatened economy rebounded in July, data showed Monday, but is set to receive a further hit from a public holiday marking next week’s funeral of Queen Elizabeth II.
British gross domestic product expanded 0.2 percent after a drop of 0.6 percent in June, the Office for National Statistics said in a statement.
June’s big decline had been attributed partly to an extra public holiday for the queen’s Platinum Jubilee marking 70 years on the throne before her passing last week.
Another public holiday is scheduled next Monday for the queen’s state funeral.
“The feeble 0.2-percent bounce back in July was driven by weak GDP in June due in part to the loss of working days from the Jubilee long weekend,” noted Yael?Selfin, chief economist at KPMG UK.
“More concerning, July’s GDP remains below the level seen in May, pointing to an overall contraction over the first two months of summer.”
Britain usually has only one public holiday in early summer but the amount was doubled for the Jubilee.
Time off work for millions of Britons next Monday means the economy will have had two more public holidays than usual in 2022.
The Bank of England (BoE) expects the UK economy to enter recession before the end of the year on decades-high inflation fuelled by surging energy and food bills.
– ‘More damaging’ –
“Looking ahead, the extra public holiday for the queen’s funeral on September 19 has the potential to be more damaging for the economy than the extra day off for the Jubilee in June,” Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said following Monday’s data.
“That said, many businesses will be able to catch up work, as most of them did in June.”
Pantheon is predicting the funeral to hit September GDP by 0.2 percent.
“That suggests that a technical recession — widely defined as two quarters of declining GDP — is hanging in the balance.”
The BoE forecasts UK inflation — already at a 40-year high above 10 percent — to keep surging this year.
In a bid to tame runaway prices, the central bank has hiked its main interest rate several times since the end of last year.
More tightening of borrowing costs had been nailed on at a BoE meeting this week but its latest monetary policy gathering has been delayed until after the funeral.
Mourners later Monday get the first opportunity to pay respects before the coffin of Queen Elizabeth II, as it lies in an Edinburgh cathedral where successor King Charles III will mount a vigil.
The queen died in Scotland last Thursday, aged 96.