A very British excuse

July 26, 2011

This time it was the royal wedding. When the economy shrank unexpectedly late last year, it was the bad weather. If Britain’s economy again struggles to generate growth in the current quarter, perhaps it will be blamed on the new series of ‘The Apprentice’.

"Thanks for nothing!"

Britain’s economy grew 0.2 percent quarter-on-quarter between March and June, exactly in-line with the Reuters poll consensus. Perhaps the most interesting part of the GDP release statement was the Office for National Statistics’ claim that without special factors, including the royal wedding, growth could have hit 0.7 percent.

That would have taken the GDP index at market prices back above 100 points – its 2006 base level – for the first time since the recession, but as it happened, it fell just short, at 99.8.

In a Reuters analysis last month explaining how economists have been much too optimistic about the strength of major Western economies, ex-Bank of England policymaker David Blanchflower pointed out a tendency for a sort of mental revisionism when it comes to GDP releases.

“This time around it’ll be the royal wedding. Every single time, you’ll say, ‘oh, it’s because the bank holiday fell on a Thursday’ or because the wind was blowing in the other direction,” he said.

This time, the ONS pointed out a negative effect on GDP from both the extra holiday made for the royal wedding and the royal wedding itself.

Next year is Queen Elizabeth’s Diamond Jubilee, which will see the creation of another one-off bank holiday on June 5th, as well as a series of celebrations. Not to mention the Olympics. Perhaps economists might want to lop a few points off their prediction for GDP in Q2 2012 while we’re on the subject of excuses.

 

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