Britain's ailing economy wins modest royal boost

LONDON, April 10, 2011 (AFP) - Britons will throng pubs, buy gifts and host parties thanks to the royal wedding, and the tourism sector is set to gain, but the extra spending is unlikely to reignite Britain's economy, analysts warn.

Retail analysts estimate up to £620 million (707 million euros, $1.0 billion) may be spent in Britain as a direct result of Prince William's marriage to girlfriend Kate Middleton at Westminster Abbey on April 29.

Britons are snapping up wedding memorabilia ahead of Britain's biggest royal wedding since 1981, when William's mother Diana married heir-to-the-throne Prince Charles.

When William ties the knot with Middleton, pubs across the nation are expected to be bustling with customers from home and abroad feasting on food and drink as they watch the events unfold on television.

Britain's tourism industry may also win a longer-lasting benefit, as the wedding advertises London to the world via millions of TV sets around the globe.

Some analysts caution that the boost to spending will be both modest and temporary and hardly likely to bring about a change of fortune for Britain's flagging economy, which shrank 0.5 percent in the final quarter of 2010.

And the benefits of wedding-related spending will be offset by the lost production due to the extra public holiday granted by the government for the wedding day.

Howard Archer, chief UK economist at research group IHS Global Insight, said the wedding may provide "some modest feel good factor but it will likely prove a fleeting impact.

"There may also be a modest boost in terms of sales of wedding-related souvenirs and food and alcohol for street parties," he told AFP.

"However, there will be a hit to the economy from the fact that it is an extra day's public holiday.

"Overall, I think the impact on the economy will be negligible. Much more important will be what is happening in the economy overall, for example, inflation developments," Archer added.

Philip Shaw, an economist at Investec financial group, claimed the royal wedding could even harm British growth because of the extra day's holiday.

Shaw said that allowing most workers a day off "could knock some 0.25 percent" from British gross domestic product (GDP) in the second quarter.

Investec noted that growth had suffered as a result of Queen Elizabeth II's Golden Jubilee celebrations in 2002, which were also turned into a public holiday.

Retail consultants Verdict estimate that the royal nuptials could inject an extra £620 million into the British economy. A separate study by the Centre for Retail Research and shopping website Kelkoo predicts that the consumer spending boost might total £527 million.

CRR/Kelkoo said that £76.5 million could be spent on alcohol, with half a million bottles of champagne being consumed at a cost of £9 million.

JD Wetherspoon, one of Britain's biggest pub chains, is hoping to entice drinkers by adorning its many bars with traditional British decorations.

"We are allocating bowler hats, union jack flags, bunting, pin badges to all pubs in order for them to decorate and involve customers," said a spokesman.

In the city of Nottingham, central England, brewer Castle Rock has created a new ale to mark the royal wedding -- and the beer branded "Kiss Me Kate" may be just the tonic to help Britons forget about their country's financial woes.

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