Thomas White Global Investing
The U.K.
The U.K. Stamp
May 13, 2011
A postcard from Europe
The U.K.: Royal wedding a mixed bag for the economy?

William and Kate mugs

To cash in on the royal wedding fever, British retailers did brisk business selling souvenirs such as these William and Kate mugs.

They made a striking sight, the prince in his crimson military jacket and his bride resplendent in ivory. Waving at the cheering crowd from the balcony of Buckingham Palace, the newlyweds appeared flushed in anticipation of the customary wedding kiss. Fighter planes thundered on the horizon, approaching to fly low over the couple in celebration.

Everybody soaked in the moment that grey afternoon on April 29. But when Prince William finally kissed his wife, not once but twice, several business owners across the U.K. probably just sighed with relief. After all, the two quick pecks on the lips of Kate Middleton marked not only the beginning of a much-celebrated marriage but also an end to the output and revenue losses those businesses claim to have suffered in the runup to the royal wedding.

The William-Kate wedding was widely expected to give a royal boost to the U.K. economy, and it did. The British media has reported that the various estimates of the total wedding-related revenue, generated through additional retail spending, tourism, and pub sales, ranged from £1 billion to £2 billion. In fact, according to a ballpark figure provided by price comparison website Kelkoo, the sale of royal wedding merchandise and commemorative products such as mugs, plates, pens, compacts, ashtrays, shot glasses, bookmarks, reusable bags, and car flags alone exceeded £0.5 billion.

Shop owners, especially those in London, who sold souvenirs like “Keep Calm and Marry On” posters and “Kiss Me Kate” beer, reported more than a 100% jump in sales for several days before the wedding. And, of course, the businesses that were directly connected with the wedding — including the already exclusive fashion house Alexander McQueen whose creative director Sarah Burton designed Kate’s dress, the Goring Hotel, which hosted Kate the night before the wedding, and Leicestershire baker Fiona Cairns, which made one of the three wedding cakes — have seen their brand value growing overnight.

However, various small businesses and trade bodies insist that all the wedding-related benefits to the British economy have been offset by the loss of productivity due to the extra national holiday declared on the occasion. The wedding date fell on the Friday following Good Friday and Easter Monday and just before the First May public holiday, a Monday. Thus, the entire period between Good Friday on April 22 and the First May public holiday on May 2 had just three work days. Many employees took those three days off or called in sick, effectively shutting down some businesses for 11 days. This trend was especially harsh on employers who run tiny businesses with just 4-6 staff members.

In fact, the Confederation of British Industry (CBI) has calculated that the public holiday on the royal wedding day caused a loss of £6 billion to the U.K. economy in terms of output and revenue losses. If this estimate is correct, the gains from the royal wedding are worth just a third of the losses and, therefore, the argument that the royal wedding has turned out to be a mixed bag for the British economy seems convincing.

Nonetheless, many commentators make the case that the real impact of the royal wedding is its role as an agent for enhancing Britain’s image and ‘soft power’ on the global stage, not its contribution in revenue terms. As a television spectacle, the event was arguably as popular as the Olympics, and as a symbol of pomp and pageantry, it is matched in contemporary history perhaps only by the Royal Wedding of William’s mother Diana.

Indeed, William and Kate’s balcony kiss may have been fleeting, but its memory, etched in the minds of an estimated two billion television viewers worldwide, should have a lingering effect on brand Britain for years to come.

 

Image Credit: Charles Hutchins under a Creative Commons license

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