The Royal Wedding took place last on 18th May 2018, as Prince Harry wedded Meghan Markle. With such a huge event brewing over the past couple months, I think it’s important to analyze the economic impacts of their big day, especially after Brexit.
The EY Item Club, the financial firm’s economic forecasting group, says that though the wedding on Saturday should have some benefits to the economy, the overall impact is likely to be limited. Howard Archer, the chief economic advisor to the EY ITEM Club, explains,
The Royal Wedding between Prince Harry and Meghan Markle will be celebrated across the UK this week, and there has been considerable speculation as to how much the UK will also be able to cheer a resulting boost to the economy… There should be some benefits to the UK economy from the Royal Wedding, although we would be wary of over-egging the potential impact or seeking to put a hard figure on the potential gains. We suspect there will be a very limited, temporary boost to the economy focused on some sectors, notably retail, tourism and, possibly, catering and pubs.
With the wedding, there could also be a temporary boost to consumer confidence due to a feel-good factor. However, this will likely subside, as the market forces will not be able to sustain it. They speculate that this will have a positive impact on business sales. The retail sector will definitely benefit from people buying Royal Wedding souvenirs, such as cups, photos, and magazines. In addition, the catering sectors will also soar as the sale of food and drinks for people holding street parties will increase. Pubs will also see an increase in sales as they have been given permission to stay open longer, and they will likely have visitors rejoicing over this special day. But how much of the extra drinking is down to the wedding will be hard to judge, particularly as one of the UK’s biggest annual sporting events — the FA Cup soccer final — falls on the same day. The British Beer & Pub Association expects sales will be £20 million, or about 8%, higher than a normal weekend. This figure is an estimation.
Many economists make it clear that some of the spendings on luxury goods are the result of switching spending from durable, necessity goods. Consequently, there might be an increase in aggregate demand, but this will only last in the short run. Thus, the Royal Wedding will not boost UK’s economy, a much-needed stimulus especially after a poor first quarter of the year and a slow start to the second quarter.
On the other hand, the consulting firm, Brand Finance, maintains that the couple’s big day is likely to provide a boost of 1.05 billion pounds, or $1.43 billion, to the U.K. economy. Richard Haigh, managing director at Brand Finance, justifies
The star power of the prince and the American actress helps make their wedding on par with Will and Kate’s extravaganza in 2011. Not only that, but Prince Harry is the lovable rogue who everyone has deemed to be the ultimate bachelor, and now he’s getting married, and I think that is a big thing in itself.
Check out the full article here.
If history repeats itself, the Royal Wedding will fall flat in terms of economics. According to the UK Office for National Statistics, the 2011 wedding of Prince William and Kate Middleton did not result in a noticeable uptick for the economy.
Most workers were given an extra day off when William, Harry’s elder brother and second in line to the throne, got married in April 2011, denting activity across the economy that month. Setting aside the hit from the extra day off, there was no noticeable lift for the economy. PwC estimated William and Kate’s wedding generated roughly £107 million ($145 million) in extra spending: Good for retailers, but less than 4% of the amount spent in the UK on Black Friday, the busiest shopping day of the year.
I find it quite interesting that two different consulting firms have two different forecasts for the same event. Economics, being a social science, you would expect there to be a sense of uniformity. But, since it deals with people and their interactions, there can be gross fluctuations in results. That’s quite interesting!