Data released on Monday revealed that the UK’s recession-threatened economy bounced back in July, but it is expected to take another hit next week due to a public holiday commemorating the burial of Queen Elizabeth II.
After falling by 0.6% in June, the British economy showed growth of 0.2% in July, according to the Office for National Statistics.
The extra vacation in honor of the Queen’s Platinum Jubilee, commemorating her 70 years on the reign, was thought to be a contributing factor to the steep drop in June’s sales figures.
Monday, February 12th, will be a holiday once again for the state funeral of the Queen.
KPMG UK’s chief economist, Yael Selfin, attributed June’s lackluster GDP growth on the loss of working days caused by the Jubilee holiday weekend.
Worse yet, GDP in July remained lower than in May, suggesting a decline in activity over the first two months of the summer.
Due to the Jubilee, Britain had two public holidays in early July instead of just one.
If millions of Britons take the next Monday off, that will mean two more national holidays than usual for the economy this year (2022).
Due to decades-high inflation caused by rising energy and food prices, the Bank of England (BoE) forecasts that the British economy will enter recession by year’s end.
One that causes “more damage”
After Monday’s numbers, Samuel Tombs, chief UK economist at Pantheon Macroeconomics, warned that the extra public holiday for the queen’s burial on September 19 could be more detrimental to the economy than the extra day off for the Jubilee in June.
However, most companies should be able to make up for lost time in July, just as they did in June.
According to Pantheon, the September GDP will be reduced by 0.2% because to the funeral.
If GDP drops for two consecutive quarters, as is often understood to constitute a recession, then “it signals that a technical recession is hanging in the balance.”
The Bank of England predicts that UK inflation, which is already around 10%, will continue to rise throughout the year, potentially reaching new highs.
The central bank has increased its key interest rate multiple times since the end of last year in an effort to rein in spiraling prices.
The latest Bank of England monetary policy meeting, at which further tightening of borrowing costs was expected, has been postponed until after the funeral.
Later on Monday, the coffin of Queen Elizabeth II will be moved from the royal chapel at Windsor Castle to the cathedral in Edinburgh, where her successor, King Charles III, will have a vigil.
It was reported last Thursday that the queen had passed away in Scotland at the age of 96.