Queen’s funeral could push U.K. into ‘technical recession’: economic forecast

A national holiday for Queen Elizabeth II's funeral has some observers concerned about the economic impact of closing businesses on both Canada and the United Kingdom.

The death of Queen Elizabeth II could be the blow that sends the United Kingdom’s already-strained economy into a “technical recession,” according to one economic projection, as some Canadians also ring warning bells about the effect of a national holiday on the country’s businesses.

The forecast follows economic data released earlier this week, which showed the U.K.’s gross domestic product (GDP) growth was weaker than expected in July.

With the British economy already contracting in the second quarter of the year, another consecutive quarter of decline would push the country into a recession, by some economists’ definitions.

Researchers at Pantheon Macroeconomics said in a note to clients on Tuesday that they expect the bank holiday for the queen’s funeral on Sept. 19 will take another toll on the U.K. economy.

Specifically, the projection calls for September GDP to drop 0.2 per cent lower than it would have been as a result of the holiday, which will see the closure of shops and restaurants as the country mourns the loss of its longest-reigning monarch.

“Following the news of an extra public holiday for the queen’s funeral this month, it is very finely balanced as to whether GDP drops again on a quarter-on-quarter basis … thus resulting in a technical recession,” the Pantheon note suggested.

The U.K.’s bank holiday does not force all businesses to close or give employees time off work, but makes the option available on a case-by-case basis.

The Pantheon forecast used June’s economic impact as a basis for September projections, as that month had two extra public holidays tied to the queen’s Platinum Jubilee celebrations.