It is often said that the death of Elizabeth II of Windsor was the end of an era, and that Britain was deeply affected by the Queen's death on September 8. On the other hand, many people keep reiterating that the British monarchy has always been symbolic—the queen did not rule but reigned. This, however, does not mean that Elizabeth's death did not have an impact on the UK economy. Her absence will be felt - and not just because her departure came during a hard recession.
A bad time for Britain
Queen Elizabeth’s death came at a bad time for Britain, which was already impacted by high inflation, the risk of recession, numerous strikes and a decline in the value of the pound sterling.
Many experts believe that much of this is the effects of Brexit, about which the late queen spoke positively.
In a speech at Number 10 Downing Street, the new PM Liz Truss said that Queen Elizabeth II was the rock on which modern Britain was built. She also said that the British people should stand behind Charles III to help him bear the enormous responsibility he now has for all of Britain. She ended her speech with the traditional “God save the King.”
Can Liz fit in Elizabeth’s shoes?
Liz Truss will definitely need King Charles’ support. The queen died two days after Tory took over as Prime Minister from the reputedly incompetent and unethical Boris Johnson. Liz Truss has announced a massive plan to help British households and businesses cope with rising energy costs. The plan involves freezing energy prices for ordinary citizens for two years and for companies and public institutions for six months.
Domestically, many households and small businesses are already feeling the effects of the winter cost-of-living hike and energy crisis, which is partly due to Russia's invasion of Ukraine. Strikes triggered by Brexit and the associated deterioration in quality of life have contributed to the crisis, without any issues related to how did the queen die.
Britain is facing a cost-of-living crisis not seen in decades. Around 10% inflation is at its highest level since the 1980s. The British pound is also stuck near its lowest level against the US dollar in nearly 37 years. Another worry is the slump in growth of the UK economy. A former colony, India has surpassed the UK—the UK is now “only” the sixth-largest economy in the world.
On the other hand, however, the unemployment rate at 3.6% is the lowest since the 1970s. There are currently 1.3 million job vacancies and 1.5 million jobseekers. Britain is returning to a market shaped by workers, who have the right to demand higher wages to compensate for the rising cost of living. Many people look for side hustles to save money. Thanks to strong labor unions, inflation has a smaller impact.
A royal delay
Another bank holiday has been declared for the Queen's funeral. This means that the British economy will have two more public holidays than usual in 2022—it was also a jubilee year. The UK's gross domestic product (GDP) rose slightly in July, but this is only a brief respite from the looming recession, which could be exacerbated by an additional bank holiday on September 19.
What's more, with the funeral and celebrations—and the fact that Liz Truss' government is still forming—Truss has extended the period for making plans to boost the UK economy. Many of the plans will be announced in a week or two, and financial institutions are now waiting for the new strategies, which also causes additional delays and slowing down of the economy.
As for British banknotes, which bear the Queen's portrait, they are still legal tender. Once the period of mourning is over, the Bank of England will announce plans to print new cash with a portrait of King Charles—which means additional cost to the taxpayer. Commonwealth governments, including Canada, however, are not required to display the portrait of the new king, but seemingly small events like this also affect the world economy.
The queen as a brand
Other effects of Queen Elizabeth's death are also crucial to the UK economy. When the queen died on September 8, not only did Britain and Canada lose their constitutional head, but the monarchy also lost a face and a brand ambassador, a person who was a symbol of the whole country.
On the other hand, it's worth remembering that major royal events, like the funeral, also promote tourism and commerce, especially for souvenirs. Tourism related to the royal family accounts for about 3% of all UK tourism profits. The royal family costs British taxpayers an average of £500 million a year, but through branding it probably brought in about £750 million—but it's hard to estimate.
Tourists visit sites such as Buckingham Palace and the Tower of London. Since the Queen died last week, more people will visit these famous sites in the coming months to pay tribute.
While the saying “The Queen is dead, long live the King” is still in effect, Elizabeth’s departure is another blow to a weakened Britain. It seems that Truss will stay in power until at least early 2025, despite Labour winning in polls since 2021.
