I heard yet again today someone using the Queen’s Jubilee Gambit to explain that next quarter (Q2 2012) may see even more sluggish growth in the economy or even that wonder “negative growth”. This is based on comments made by the Governor of the Bank of England a few weeks ago:
“Celebrations for the Queen’s diamond jubilee could throw the British economy into reverse again, Sir Mervyn King warned on Tuesday.
The Bank of England governor said it was “quite possible” UK output would shrink over the next three months.” (Guardian 27 March 2012). Really?
Well, firstly I have grave doubts about the affect of Bank Holidays – we live in 365-24/7 world these days and for many people having a day off just means time-shifting work to other days (if they do actually stop working on the day). (I recorded an interview about this for the BBC’s “More or Less” which I hope should be appear soon.)
But rather more importantly – it is passing strange that someone of Sir Mervyn’s supposed ability didn’t ALSO say that in Q1 of 2012 the economy had an equal boost because Wednesday 29th February was not only an extra working day, but one for which none but the weekly paid got paid. I know I’m not getting an extra 1/365th of my salary this year because it’s a Leap Year. Is anybody? So on Sir Mervyn’s basis Q1 seeing a drop of -0.2% of GDP was actually much better than it should have been if we hadn’t had an extra “free” day. Do the math, Mervyn.