Platinum boost for Britain
Nothing lifts the spirits more than a good celebration, as long as it is not in number 10 or a Durham beer hall. the Platinum Jubilee break, the longest spring bank holiday in living memory, should do that.
As the nation puts out the bunting, the pageantry is unfurled and the nation collectively congratulates itself as being first in the world for glorious commemorations, the real world of cost-of-living shocks, Partygate and eruptions on the tory benches can temporarily be forgotten.
the optimist in me says that anything which shows Britain at its best – from the brilliance of the Elizabeth Line to the enormous investment going into our thriving life sciences and the creative genius of putting on a national festival – has to be good for the economy, our prosperity and well-being.
Certainly, after Chancellor Rishi Sunak’s very un-tory £21bn rescue package for those suffering from surging prices, there should be reason for not being down in the dumps. one survey of consumers suggests that the long weekend will see the nation’s bars, pubs, cafes and restaurants teeming with people, and the supermarkets (those open, anyway) overflowing with customers. it is estimated that as much as £6.4bn extra will be spent.
As confidence is the lifeblood of the economy, all of this spending should be for the national good – a sort of Christmas in June.
But amid the revelry, we should not lose sight of Scottish philosopher thomas Carlyle’s aphorism that ‘economics is the dismal science’. As helpful as a national jollification will be to the mood of citizens, it will not erase the lost output from an extra two days, with the economy all but shut down.
By the standards of many Western nations, the UK is woefully short of public holidays. it may be easy to find extra events to celebrate, but each such day marks a loss of output.
Economists consulted by Bloomberg estimate that each extra day of holiday will knock a half-point off the nation’s output in the second quarter.
GivEn that the economy grew by just 0.8pc in the first quarter of the year, that is likely to mean that the current quarter could end up in negative territory, perhaps 0.4pc down. hopefully lost production will be recovered in subsequent months and the UK can escape the misery of two quarters of falling output, widely defined as recession.
the national conversation has been so dominated by concerns about the energy crisis and the cost of living that it has been forgotten that, post-Covid, large swathes of the country are better equipped to cope than has been the case in previous crises.
overcrowded and impossible to navigate airports are not just a legacy of the pandemic but an indication that travel demand is outstripping supply.
Recent Bank of England data shows the cash sitting in current and savings accounts is still rising. it jumped by £5.7bn in April, higher than the £4.19bn average last year.
that suggests many households hold cash cushions and the road to ruin is not quite as widely spread as feared. this may be just as well. if the Bank of England feels the need to go harder and faster in raising interest rates on June 16, the impact on those homeowners without fixed-rate deals, and those taking out mortgages, could be devastating. Moreover, the tougher autumn and winter quarters of energy bills are still to come.
nevertheless, accumulated savings, near full employment, improved living standards and an ability to go on overseas holidays and subscribe to netflix mean that today’s households are far better placed than those of 70 years ago.