Britain’s Economy Needs a Pick-Me-Up. Is the Coronation Enough?

 

Britain’s Economy Needs a Pick-Me-Up. Is the Coronation Enough?

 

Caught between slow growth and high inflation, businesses are hoping King Charles’s coronation will bolster consumer confidence enough to last more than just one weekend.

 

Eshe Nelson

By Eshe Nelson

Reporting from London and Kings Worthy, a village in southeast England.

May 4, 2023

https://www.nytimes.com/2023/05/04/business/uk-economy-king-charles-coronation.html

 

Dawn Anchor, who runs a pub in the village of Kings Worthy, about 60 miles southwest of London, has everything she needs: reams of red, white and blue bunting, mini Union Jack flags and a life-size cardboard cutout of King Charles III.

 

This weekend’s coronation of Britain’s new monarch has been a gift for her establishment, one of just a handful of pubs in Britain aptly called The King Charles.

 

And like many business people enduring Britain’s economic doldrums, Ms. Anchor hopes the coronation will bring some much-needed cheer (and sales).

 

At The King Charles, the celebrations will begin on Friday with a 17-hour day, serving breakfast through dinner, with afternoon tea in between. Fuller’s Coronation King’s Ale, a special edition bitter, will be on tap and likely to contribute to the estimated 17 million extra pints that are expected to be poured around the country over the three-day weekend, according to the British Beer and Pub Association.

 

Festivities at the pub extend beyond the traditional British pastime of drinking. Also planned: cake competitions, dog shows, horse-and-carriage rides, choir singing and other musical performances.

 

“I’m hoping for a huge increase” in customers, Ms. Anchor said. But more important, she said, the weekend is a chance to “showcase what we do,” and attract people to keep coming once the coronation bunting is pulled down.

 

“It’s all about what people might do after,” she said.

 

The country — businesses and households alike — could use some respite. For much of the past year, the British economy has been stagnant. Its inflation rate is the highest in western Europe, food prices are about 20 percent higher than a year ago and households are feeling the cold grip of a deep cost-of-living crisis.

 

Energy bills at The King Charles have doubled and food costs have jumped. Increasing the number of customers, for example with cut-price meals on quiet days, has been the only way the pub has been able to battle soaring costs. Business has been good, Ms. Anchor said, but efforts to draw people into the pub can’t let up. The coronation weekend is an unmissable opportunity.

 

The hospitality industry, in particular, is set to benefit this weekend, which includes a national holiday on Monday. UKHospitality, a trade group, estimates businesses will bring in an additional £350 million ($437 million) as hotels fill up and pubs will be allowed to stay open later. Businesses hope the coronation can fuel an upswing in consumer confidence, but the celebrations are unlikely to fundamentally change the British economy.

 

“The overall impact probably is going to be very small — could be positive, could be negative,” said Stephen Millard, a deputy director at the National Institute of Economic and Social Research.

 

National holidays tend to reduce economic output because offices, factories and many other workplaces close for the day, even as tourism and hospitality activity increase. Last June’s Platinum Jubilee weekend, which celebrated Queen Elizabeth II’s 70 years on the throne and included an additional holiday, had little effect on quarterly economic growth data.

 

“The overall picture is going to be very sluggish growth this year, I don’t think that’s going to change — coronation or not,” Mr. Millard added. Britain might avert a recession this year as the economy is doing marginally better than expected, but what the economy needs is a rapid slowdown in inflation and an increase in public investment in critical sectors such as health, education and infrastructure, he said.

 

But the coronation could improve confidence, Mr. Millard said. “The economy could do with a little bit of a pick-me-up.”

 

The last coronation, in 1953, was also expected to bring some relief. The economy was still recovering from the Second World War. There were familiar celebrations, including processions and street parties. Sugar rationing was still in place, though it was slightly loosened to help people enjoy the celebrations, according to the British Parliament’s website.

 

Seventy years later, cakes and other treats are central to the celebrations. Food retailers are selling coronation-themed cake, biscuits and other items. The Centre for Retail Research estimates more than £130 million will be spent on food and party items, as well as another £245 million on souvenirs and other memorabilia. The sales would be a boon to retailers because for most of the past two years, sales volumes have been falling, as high prices forced people to cut back.

 

Still, the coronation weekend isn’t expected to be as big as the Platinum Jubilee, said Kate Nicholls, the chief executive of UKHospitality. But May brings two other holidays and the Eurovision Song Contest, this year based in Liverpool, and is swiftly followed by the finals of the FA Cup, the popular soccer tournament.

 

“There is something for everybody and we’re hoping that we can start to rebuild that momentum and rebuild consumer confidence,” Ms. Nicholls said.

 

“It has been a long, slow road to recovery” since the pandemic, she said, noting higher energy bills and other costs and staffing challenges.

 

Brigit’s Bakery in central London is taking advantage of the extra tourism. It’s decked out one of its double-decker buses, which serves afternoon tea on the move, in coronation-themed decorations. Three times a day for about a month, the coronation bus tour will roll past London’s top tourist attractions, like a moving billboard.

 

The coronation “is bringing a huge cash infusion into central London businesses, and we’re able to reap some of those benefits,” said Mehran Sahabi, the director of operations at the bakery.

 

It will be a welcome boost as the bakery has watched the cost of its essentials — namely flour and butter — skyrocket.

 

For tourists with deeper pockets, the Hotel Cafe Royal is offering a package that includes a private tour of the Tower of London and viewing of the Crown Jewels after hours. Starting price: £12,995.

 

The  outing has been put together by Linda Hugo, who has been designing exclusive royal-themed experiences for years.  Since she started her company, Beyond Curated, in 2019, she’s had to steer her business through pandemic lockdowns. She hopes the coronation is the start of an increase in business and tourism for the whole year; she’s already thinking up new themes inspired by the king’s interests, such as botany.

 

“The start of the year has been a little bit quieter than I was expecting,” Ms. Hugo said. “Even though it’s picking up significantly now, I think we’re still maybe not seeing as much excitement internationally around the coronation as we were expecting.”

 

She expects some people want to avoid the crowds and will visit London after the festivities.

 

Back at The King Charles pub in Kings Worthy, there is also the expectation that this is just a beginning. Visitors to the pub this weekend will be greeted with billboards advertising coming events, including outdoor performances of “Romeo and Juliet.”

 

“This is the start of the summer for us,” Ms. Anchor said.

 

Eshe Nelson

Eshe Nelson is a reporter in London, where she writes about companies, the British economy and finance. More about Eshe Nelson