The Bank has said that people opting to use the extended bank holiday as a way of taking an extra break or businesses closing for longer, could have a significant impact on the finances of the nation.
The UK has slipped into a technical double dip recession, with the economy contracting in the last quarter of 2011, as well as the first three months of 2012. The Bank has said the Jubilee means there is no chance of recovery by the second quarter of 2012, as the celebrations will be a hindrance to growth.
In 2011, the Royal Wedding caused the economy to shrink by 0.4% and experts believe the impact of the Jubilee weekend will be similar, estimating a contraction of around 0.5%. If proved correct, that will mean the third successive quarter of negative growth, making a mountain for economic recovery.
There is some respite, as the Bank has said that it believes the Olympics will have the reverse effect and has predicted that the UK will experience growth of around 0.5% in the third quarter, largely thanks to the Games.
The chief economist for the Bank of England, Spencer Dale, said that forecasting the likely impact of the Olympics was difficult because of a number of factors. The bounceback following the cessation of business because of the Jubilee is likely to play a part and, while extra revenue will be created because of tourism, some businesses – such as bus tours into London – will suffer as a result.
The Bank has also warned that production levels and firms in the UK could also be rocked by employees struggling to get into work in the capital, because of congestion, as well as more people wanting to take time off.
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