Did the Queen save us from a recession?

The Queen was rarely seen during the four-day celebrations marking 70 years since her accession to the throne. She was only seen in person once during the celebrations, giving well-wishers a notorious wave from a Buckingham Palace balcony. You may have also spotted her having a cuppa with Paddington Bear on video, and her hologram did appear in a golden carriage ride.

She may not have been so visible during the Platinum Jubilee celebrations, but she might have made a significant contribution to the UK economy that is even less visible - unless you take a hard look. How these celebratory events unfolded probably prevented the UK from entering into a recession later this year. But how?

First, what is a recession?

A recession is defined as two consecutive quarters with shrinking economic growth, which is measured by GDP.

The first quarter of 2022 saw GDP increase by 0.8% but the second quarter is expected to see GDP shrink, partially due to low consumer confidence, Russia’s invasion of Ukraine and rising inflation.

If this prevails and the UK was to experience another decrease in GDP in the third quarter, we would officially enter into a recession.

Did the Queen’s Jubilee stop a UK recession?

It’s quite possible that the timing of the queen’s accession to the throne 70 years ago has prevented a recession in 2022. The four-day celebrations included a public holiday on June 2nd which usually occurs at the end of May.  However, it also included a bonus holiday on June 3rd.

This additional holiday will undoubtedly depress the economic output in the second quarter and we could therefore more easily experience an increase in GDP in the following quarter. This could artificially but officially stop the UK from entering into an official recession.

The Office for National Statistics (ONS) doesn’t adjust for ad-hoc bank holidays like the additional one given during the Queen’s Jubilee. It only accounts for recurring bank holidays that take place every year, even if they don’t always take place on the same day.

The additional bank holiday has been estimated to slash as much as £2.4 billion off the UK economy, which could decrease GDP by 0.5%. When the Queen celebrated her Diamond Jubilee in 2012 with another long weekend, GDP took a 0.1% hit.

These additional holidays artificially decrease GDP, which sets a lower official base from where GDP can grow the following quarter. This creates what is known as a “bounce back”. It’s easier for GDP to grow when it is growing from figures that don’t account for the additional bank holiday.

Would we be in a recession without the Jubilee?

Experts predict that without the Jubilee and the extra day off, the UK’s GDP will almost certainly decrease in the second and third quarters. But due to the Jubilee, it will be artificially lower in the second quarter and should therefore show an artificial increase in the third quarter.

This will prevent the need for the UK Government to declare a recession. But this doesn’t mean the UK won’t feel the effects of a recession in the near future.

July 2022