According to figures released Monday, the UK’s recession-threatened economy recovered in July. However, a national holiday celebrating the burial of Queen Elizabeth II the following week is expected to hurt the economy severely.
British GDP increased by 0.2% after declining by 0.6% in June, according to a statement from the Office for National Statistics.
Before the queen’s death last week, the significant fall in June had been partially ascribed to an additional public holiday for her Platinum Jubilee, which celebrated 70 years as monarch.
The state funeral for the queen is set for the following Monday as another holiday.
According to Yael Selfin, chief economist at KPMG UK, “the meager 0.2-percent bounce back in July was caused by sluggish GDP in June due in part to the loss of working days from the Jubilee holiday weekend.”
More worryingly, July’s GDP was lower than in May, suggesting that the economy generally shrank throughout the first two months of the summer.
Britain typically only has one public holiday in the early summer, but for the Jubilee, the number was doubled.
The economy will have experienced two more public holidays than usual in 2022 because millions of Britons will be taking the following Monday off from work.
In response to decades-high inflation fueled by rising energy and food prices, the Bank of England (BoE) anticipates that the UK economy will enter a recession before the end of the year.
“More harmful”
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, commented on the economy after Monday’s data: “Looking ahead, the additional public holiday for the queen’s funeral on September 19 has the potential to be more detrimental for the economy than the additional day off for the Jubilee in June.”
However, as most of them did in June, many enterprises will be able to make up lost time.
According to Pantheon, the burial is expected to reduce September’s GDP by 0.2 percent.
That means that a technical recession, which is generally understood to be two-quarters of decreasing GDP, is still possible.
The BoE anticipates that UK inflation, which is currently at a 40-year high above 10%, will continue to rise this year.
The central bank has increased its primary interest rate many times since the end of last year to control spiraling prices.
The BoE had agreed to further tighten borrowing prices at a meeting this week, but its most recent monetary policy gathering has been postponed until after the burial.
Later on Monday, mourners will get the first chance to pay their respects in front of Queen Elizabeth II’s coffin as it rests in an Edinburgh church where her successor King Charles III will hold a vigil.
At age 96, the queen passed away in Scotland on Thursday.
