Is the Coronation helping London’s – and the UK’s – economy?

Is the Coronation helping London’s – and the UK’s – economy?

There are three ways of quantifying the impact of King Charles III’s coronation on the capital’s economy and that of the UK as a whole.

One way is to say that any Bank Holiday entails a loss of productivity, including when the state has bestowed the day off in honour of its head getting crowned. The other is to say that the influx of visitors inspired by the pomp and pageantry will give a lift to London’s hospitality and culture sectors it would not otherwise have enjoyed. The third way is to say that both are true

That third way is the right way, of course, though working out whether or not the lift makes up for the loss is difficult. Prior to London’s last big royal occasion Bank Holiday, the one for the funeral of Elizabeth II last September, there were predictions that the extended weekend would tip the country into recession and delight that it would boost the number of people spending money to stay in hotels, eat, drink, go out get around to see the sights.

Don’t underestimate the importance of London’s tourism sector, which City Hall and its related “growth and destination agency” London and Partners say contributes an overall £36 billion a year to the capital’s economy, along with its night time activity. And when the capital’s economy does well, so does the whole country’s.

Estimates of the benefit from the coronation three days off vary, with the Centre for Economics and Business research saying additional tourism and pub spending throughout the whole of UK will be £337 million and Visit England saying the overall boon in England alone will be a much higher £1.2 billion. Whatever, the lion’s share will be generated in London.

Against the upbeat numbers we must place PwC’s calculation last spring, as reported by CNN, that a Monday Bank Holiday (as distinct from a Friday one) costs the UK economy £877 million, even after higher consumer spending is taken into account. However, PwC’s economics director Barret Kupelian has recently written that having an extra Bank Holiday in a May already blessed with two of them “should not have a significant bearing” and that the coronation will provide “a welcome boost to inbound tourists and associated spend, outbound tourism for in-term holidays, and pub, restaurant and leisure activity” along with more money going on groceries.

The coronation also serves as a reminder of the government’s decision in 2020, seemingly informed by anti-London sentiment under the premiership of Boris Johnson, to axe the VAT concession on certain goods enjoyed by overseas visitors. That change was reversed during the fleeting ascendancy of Liz Truss, only for the so-called “tourist tax” to be restored by her successor. London’s hotel are reportedly almost booked out. Has UK Plc missed a trick?

Photo from City of London shows Coronation lunch at Aldgate. Follow On London on Twitter and Dave Hill on Twitter

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Categories: Analysis

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