The Latest Economy Booster: Britain's Royal Baby

The Latest Economy Booster: Britain's Royal Baby

royal babyYesterday's arrival of a new baby boy for Kate Middleton and Prince William will do more than boost good spirits in Britain—it could also have a positive effect on the United Kingdom's economy.

Economists predict that the as-yet-unnamed newborn will help bring in $372 million in retail sales alone—all 8 pounds, 6 ounces of him. The forecast, released by the U.K.’s Centre for Retail Research, accounts for both $239 million in new memorabilia and tchotchke sales (commemorative baby bib, anyone?), as well as $133 million in food and alcohol as the British plan parties to celebrate.


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“The royal birth may provide the economy with a temporary, small positive boost at a time when it seems to be increasingly moving in the right direction,” Howard Archer, chief U.K. and European economist at IHS Global Insight, said in a statement.

The birth isn’t the first national event to jolt retail sales—the buzzed-about royal wedding in 2011 and Queen Elizabeth II’s Diamond Jubilee in 2012 provided hefty stimuli of their own. But there’s a key difference between those events and the prince’s arrival. The previous celebrations were declared public holidays—meaning stores, factories and businesses were shuttered for the day. Retail sales swelled, but the holiday hit to other businesses meant an overall economic loss.

In this case, the birth didn’t garner a day off—so retail sales may soar and the economy should be business as usual.

The 'Kate Effect' Extends to Baby

The new baby prince could have an economic impact in more than just commemorative items and food sales.

We've already seen the "Kate Effect" in action. In the same way people rushed to get their hands on any outfit photographed on his mother, the new baby will also likely inspire strong copy-cat sales of his stroller and other baby products of choice.

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Even more, extensive coverage of the arrival could also result in a boost to the nation's tourism industry, as the media plugs the U.K. repeatedly over the next few days.

There is even speculation about how the single birth will affect the birth rate at large. Mothercare, a baby products retailer, hopes that the birth will not only encourage retail sales now—the company’s shares rose 2.14% on Monday—but maybe even help create more little ones in the future. “It brings with it the feel good factor, and there could be some uptick in the birth rate,” Simon Calver, the company’s chief executive, told The Financial Times.


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