Thomas White Global Investing
The United Kingdom
The United Kingdom Stamp
November 26, 2010
A Postcard from Europe
The United Kingdom: A Royal Boost to the Economy?

Westminster Abbey

Westminster Abbey, where many an English coronation and royal wedding has taken place over the centuries.

It’s Royal fever all over again in the United Kingdom. When Prince William announced his engagement and forthcoming wedding next year to Kate Middleton, it generated a buzz in British circles that hasn’t been heard since the late Princess Diana’s wedding decades ago. To the outsider, a royal wedding seems fun, exciting and increasingly, a pretty rare event considering there are so few monarchies left in the world. But apart from the romanticism of the event, can the royal wedding of the new millennium lift a tired old British economy and ignite fresh life into it?

Well, Verdict Research, a retail analysis company owned by Datamonitor, seems to think so. The firm estimates that the royal wedding can add $995 million to the U.K. economy. Orders apparently are already pouring in for commemorative mugs, champagne and wine boxes, and even iPhone covers, as companies race to compete before the big event next year. Magazine publishers and editors are rubbing their hands in glee at the prospect of a jump in newsstand sales. The travel industry, dragged down first by recessionary woes, the volcanic chaos triggered by Eyjafjallajokull, and then a disastrous World Cup campaign by the English football team, is especially cheering the royal engagement. This time, the travel industry is hoping that the royal wedding, set to take place sometime in spring or summer next year, will spur a jump in hotel and holiday bookings. To get an inkling of things to come, just look to Kenya, the place where Prince William proposed, where there has already been a surge in interest.

And the British economy can do with what help it can get. Although the economy surprised analysts with a 0.8% growth in the third quarter, future projections remain pessimistic, bordering more on hopes that the U.K. can avoid a double-dip recession than confidence in its growth. A worried government is trying to cut back on public spending under Chancellor George Osborne’s austerity plans. A million jobs are under the axe, and Osborne recently introduced a hike in sales tax from 17.5% to 20%, with the country’s net debt already climbing to 57% of the gross domestic product. Consumer confidence then in the British economy is not exactly sky high, but what the royal wedding can provide would be something that economists can’t quite calculate – the feel-good factor. Brand Britain will be on display with what will be no ordinary wedding. And when you consider that London will be hosting the Olympics the very next year in 2012, then it appears that Brand Britain has at least two years to do what it can to spur the economy ahead. Royals or gold medals – interesting times ahead indeed.

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