Occasionally I despair of my own profession. Even economists should be able to enjoy a long weekend. Yet some of us are stuck debunking commentary on the economic impact of the Queen’s Platinum Jubilee celebrations – much of which justifies the old tag of the ‘dismal science’.
The long Jubilee weekend will indeed mean that economic activity, as usually assessed, is lower than it would otherwise have been. The output and income lost due to the temporary shutdown of most businesses will only partially be offset by increased spending in other areas, or recouped later.
We have, of course, been here before. The monthly measure of UK gross domestic product (GDP) fell by 2.2 per cent in June 2002 (during the Golden Jubilee celebrations), and by 1.7 per cent in June 2012 (the Diamond Jubilee).
A similar fall of around 2 per cent in June this year would be equivalent to a hit of around £4 billion. This could also be enough to ensure that UK GDP contracts in the second quarter as a whole (from April to June), encouraging more talk of a ‘recession’.
But does this really make any sense? Good economics should be about people’s happiness, as well as pounds and pence. It is hard to put a monetary value on the boost to wellbeing, or community spirit. Nonetheless, I suspect most people would say the celebrations are worth a brief dip in GDP.
Needless to say, not everyone will get into the Jubilee spirit. The usual halfwits are already out in force on social media, comparing the bunting in Regent Street to ‘Nazi Germany’, or suggesting that street parties are a tacit celebration of slavery (yes, really!).
But the sceptics are also free to take time off to do their own thing – even if that is just to moan about the Monarchy. They seem to enjoy that too, which is fine by me. There are also some more conventional economic reasons why this Jubilee is more likely to pass the test of a cost-benefit analysis.
The UK is only just emerging from one huge crisis – the pandemic – and is in the midst of another – over the cost of living. The benefits from the lift to morale could therefore be greater now. The retail, hospitality and events sectors could also all do with an extra boost.
On the costs side, some people and companies will earn less, and tax revenues may fall. But the household sector as a whole (not everyone, obviously) has built up a significant amount of savings during the pandemic, which will help to tide people over.
The argument that the Jubilee disruption makes a ‘recession’ more likely does not stack up, either. This partly depends on what you mean by ‘recession’. In the US it would be defined as ‘a significant decline in economic activity spread across the economy, lasting more than a few months’. The temporary hit from a long weekend break would not meet this criterion.
In the UK it is more common to talk in terms of two successive quarterly falls in GDP. Here, the Jubilee celebrations might drag down one quarter, but actually make it more likely that the economy records positive growth in the next. This is what happened in both 2002 and 2012 (albeit helped, in the latter case, by the boost from hosting the Olympics).
But in any event, this is surely the wrong way to think about what is happening in the real world. If ‘recession’ has any meaning it has to be something bad, where people are harmed in some way, such as losing their jobs, or being forced to cut back on spending. Taking time off for a jolly street party hardly counts.
Every country has national festivals from time to time – in fact, usually more often than we do. If another country, say, France, celebrated a major event with flags and bunting, and this happened to cause a temporary fall in GDP, would we really say they were worse off as a result? I don’t think so.
So enjoy the Jubilee festivities – and please be kind to any economists that you bump into!
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