Queen’s funeral could plunge UK into ‘technical recession’: economic forecast – National

The death of Queen Elizabeth II could be the blow that sends the UK’s already strained economy into a ‘technical recession’, according to an economic projection, as some Canadians also sound the alarm about the effect of a national holiday on the companies of the country. .

The forecast follows economic data released earlier this week, which showed that UK gross domestic product (GDP) growth was weaker than expected in July.

With Britain’s economy already contracting in the second quarter of the year, another consecutive quarter of decline would plunge the country into a recession, according to the definitions of some economists.


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Researchers at Pantheon Macroeconomics said in a note to clients on Tuesday that they expected the Queen’s funeral bank holiday on September 19 to have another impact on Britain’s economy.

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Specifically, the projection calls for September GDP to fall 0.2% from where it would have been following the holidays, which will see shops and restaurants close as the country mourns the loss of its longest-reigning monarch.

‘Following the announcement of an additional bank holiday for the Queen’s funeral this month, it is very finely balanced on whether GDP falls again on a quarterly basis… resulting in a technical recession’ , suggests the Pantheon note.


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Trudeau announces that Canada will have a national holiday to mark the death of Queen Elizabeth II


Trudeau announces that Canada will have a national holiday to mark the death of Queen Elizabeth II

The UK public holiday does not force all businesses to close or give employees time off, but makes the option available on a case-by-case basis.

The Hall of Fame forecast used June’s economic impact as the basis for the September projections, as that month had two additional public holidays linked to the Queen’s Platinum Jubilee celebrations.

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Pantheon notes that the success of the September 19 holiday could be greater than that of June, as some businesses that remained open for the Jubilee could “close as a sign of respect” next week.

Although the report highlights the risk of a holiday-related recession, Pantheon ultimately expects GDP to hold steady with the second-quarter numbers — just enough to narrowly circumvent the third-quarter slowdown.

But the UK economy is already on shaky ground heading into autumn, with Capital Economics’ UK chief economist Paul Dales suggesting in a recent note that the country “is probably already in recession”.

The UK is currently facing a cost of living and energy crisis linked to Russia’s war in Ukraine. Prime Minister Liz Truss’ plans to cap utility costs in October will “help” but not be enough to prevent the country’s GDP from falling in the coming quarters, Dales wrote on Monday.

The Bank of England has pushed back its benchmark interest rate decision by a week to September 22 in light of the Queen’s death.

Pantheon said “recent developments” have “strengthened the case” for the central bank to raise rates by half a percentage point instead of 75 basis points.

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Dales said in his memo that he also expects a 50 basis point move.


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Canadians are worried about the economic impact

With Prime Minister Justin Trudeau’s announcement Tuesday that Canada will also hold a federal public holiday on September 19 to mark the Queen’s funeral, similar concerns are being raised domestically about the impact on the economy.

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The Liberal government has set next Monday as a holiday, but it will be up to the provinces to decide whether workers will receive paid leave on September 19.

Prince Edward Island says there will be a provincial holiday, for example, but Quebec says no. Ontario will also not have a provincial holiday, with Premier Doug Ford instead announcing a “day of mourning” with a moment of silence.

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The Canadian Federation of Independent Business (CFIB) has urged provinces not to declare a statutory holiday on Monday, calling the six-day notice for such a move “deeply unfair to small businesses”.

“Small businesses are already struggling with labor shortages and forcing them to shut down or pay their employees time and a half without notice would be extremely costly or result in a day’s loss of productivity,” he said. CFIB President Dan Kelly said in a statement, adding a holiday “would cost the economy billions.”

“Smaller scale” of events expected in a “fragile economic climate”

There is no official cost estimate for the Queen’s funeral, which will certainly include expenses such as flowers, a military procession and a flyover, but journalist and royal researcher Emily Stedman says the funeral of the Queen Mother in 2002 are a possible benchmark for what to expect.

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That event cost about £5.6 million (C$13.7 million at exchange rates at the time), Stedman says, including £4 million for security alone.

She expects the events for the coronation of King Charles III will still cost “millions”, but are expected to be “on a smaller scale” than the rites of previous monarchs.


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Queen Elizabeth II’s coffin set to move to London as masses of mourners pay their respects


Queen Elizabeth II’s coffin set to move to London as masses of mourners pay their respects

Queen Elizabeth II’s coronation in 1953 would have cost around £46 million in today’s figures (C$69.6 million), Stedman says, adding that she expects a “similar figure for the coronation of Charles”.

But the UK’s “rather fragile economic climate” could see the Royal Family downsize the ceremony, she adds.

“We are really living in quite a worrying time economically,” she says.

“These two events, the Queen’s funeral and the coronation of King Charles, will be funded by taxpayers’ money which we have funded by the government. So I imagine there’s a lot of concern about the cost of these upcoming events and the impact it will have on the economy.

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– with files from Anne Gaviola of Global News

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