News

Jubilee boost to UK economy

Published 1 June 2012

The Queen’s Diamond Jubilee Day will bring a much-needed business bonanza to the UK economy, according to a University of Brighton expert.

Dr Jens Hölscher, a reader at the university's Brighton Business School, said: "People will spend more money on street parties, trips to London and special events in their homes. Leisure industries, transport, public houses, hotels and restaurants will be soaring.

"Moreover, the event will attract many tourists from abroad which, in economic terms, equals the effect of an export surplus of the UK to the rest of the world. Such export surpluses normally carry strong multiplying effects on national income which, in turn, stimulate aggregate demand even further.

"London and the South East will benefit particularly although the overall demand effect is difficult to estimate due to uncertainties such as the weather."

Dr Hölscher said he was surprised that Bank of England Governor, Sir Mervyn King, believes the overall effect of Jubilee Day will be negative. Dr Hölscher said: "This is a supply side-centred point of view which takes the gap of production as cost for the UK economy, because the majority of people will not go to work.

"But is it as simple as that? Much of that production will just be re-scheduled, either anticipated or postponed. Also, there is already some additional production on the way, be it souvenirs, festivities equipments or jubilee beers.

"This extra holiday will also boost the spirits of the workers so that employees will come back to work with better motivation, leading ultimately to higher productivity. Some sectors like retailing, the self-employed, health provision and education might not be affected by supply-side contractions at all. For example, my colleagues and I have to get on with marking examination scripts be there a holiday or not.

"Economics is an uncertain science and, as with most investments, we do not know for sure what the overall long-term effect of this jubilee day will be. But, even if my predictions do not come to fruition, at least we can say we had a good day – and in times of economic troubles.”