Data released on Monday (Sep. 12) showed that the U.K. economy, already threatened by recession, recovered in July. However, the economy is expected to take further damage from a public holiday celebrating the burial of Queen Elizabeth II the next week.
Prior to the queen's passing last week, the large fall in June had been partially attributed to an additional public holiday for her Platinum Jubilee, which celebrated 70 years as monarch.
The state funeral for the queen is set for next Monday as another holiday.
Today, mourners get the chance to pay their respects to Queen Elizabeth II's casket as it lies in an Edinburgh cathedral where her successor King Charles III will hold a vigil on Monday.
Age 96, the queen passed away in Scotland on Thursday.
The British economy expanded by 0.2% in July after falling by 0.6% in June, according to the Office for National Statistics.
"The feeble 0.2% bounce-back in July was driven by weak GDP in June due in part to the loss of working days from the Jubilee long weekend," Yael Selfin, chief economist at KPMG U.K. said. "More concerning, July's GDP remains below the level seen in May, pointing to an overall contraction over the first two months of summer."
Because millions of Britons will be off work on Monday, the economy will have enjoyed two more public holidays than usual in 2022.
Normally, Britain enjoys only one public holiday in early summer, but for the Jubilee, the number was doubled.
The Bank of England (BoE) predicts that the U.K. economy will enter recession before the end of the year, owing to decades-high inflation fueled by rising energy and food prices.
The BoE expects U.K. inflation, which is currently at a 40-year high above 10%, to rise further this year.
"Looking ahead, the extra public holiday for the queen's funeral on Sep 19 has the potential to be more damaging for the economy than the extra day off for the Jubilee in June," Samuel Tombs, chief UK economist at Pantheon Macroeconomics, noted. "That said, many businesses will be able to catch up work, as most of them did in June."
The cremation is expected to reduce September's GDP by 0.2%, according to Pantheon.
The central bank has increased its main interest rate multiple times since the end of last year in an effort to control spiraling prices.
The BoE had agreed to further tightening of borrowing costs at a meeting this week, but its most recent monetary policy gathering has been postponed until after the funeral.
