British coronation set to provide latest drag on its economy     

Deutsche Bank predicts extra bank holiday will trim 0.5% from British GDP in May.

The extra bank holiday for King Charles III’s coronation is set to drag down what otherwise may be gathering momentum in the British economy.

Forecasters warned the additional day off on May 8 would help trigger a 0.7% slide in GDP in May and could tip the economy into a minor contraction in the second quarter.

It will be the second time in a year that royal events have weighed on growth, but analysis suggests the impact of those events is declining. 

"We have pencilled in a 0.7% drop in GDP in May with a rebound of a similar magnitude in June,” said Dan Hanson, economist at Bloomberg Economics. 

James Smith, economist at ING, said the temporary drag was a key reason “why overall second quarter GDP will come in negative”.  

“The experience in 2022 — extra bank holidays in June and September — suggest the impact has become less pronounced than it was in previous years,” he said.

The British economy has had a more resilient start in recent months than economists had expected. Many have scrubbed their predictions for a recession this year despite inflation remaining stuck in double digits. The coronation’s drag on second-quarter growth could mask an acceleration in the economy’s momentum that survey data is starting to reflect.

Deutsche Bank UK economist Sanjay Raja said the extra bank holiday would trim 0.5% from GDP in May, helping to trigger a small drop in output in the second quarter.

“While industries such as hospitality and leisure are likely to do well, others will likely see a hit from the additional working day lost,” Mr Raja said. He said professional services, factories and construction would be among the sectors to lose out as work is put on hold. 

• Bloomberg