Key Takeaways

• The Sovereign Grant is provided by the British Government to the royal family as support for the discharging of royal duties and for the maintenance of royal palaces.
• In FY2021, the total expenditure of the Sovereign Grant was £96.9 million, which was an increase from £89.6 million for FY2020.
• Revenues from the Duchy of Cornwall meet the expenditures of the Prince of Wales and The Duchess of Cornwall as well as the expenditures from the Duke and Duchess of Cambridge.
• In FY2022/21, the Royal Collection raked £24 million in revenues, which is an increase from £6.6 million in 2021/20. The revenues of the Royal Collection came from donations and legacies, charitable activities, trading activities, investments, and other income.
• In 2017, the monarchy contributed £1.77 billion to the UK economy, out of which tourism accounted for £550 million, the Crown Estate surplus - £329 million, and informal endorsements - £200 million. The total public cost of the monarchy was estimated at £292.6 million, or £4.50 per capita, in the same year.

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Sovereign Grant

• The Sovereign Grant is provided by the British Government to the royal family as support for the discharging of royal duties and for the maintenance of royal palaces.
• The royal family's expenditures are funded by public funds in exchange for the surrender of revenue from the Crown Estate to the government. The Sovereign Grant is calculated as 25% of the income account net surplus from the Crown Estate.

• In the 2021 financial year, the Sovereign Grant generated revenue of £9.4 million, which is a drop from £20.2 million in 2020.

• In the same year, the total expenditure of the Sovereign Grant was £96.9 million, which was an increase from £89.6 million for 2020.
• Also in FY2021, the expenditure included payroll amounting to £24.1 million, other staff costs amounting to £3.3 million, property maintenance costs of £49.5 million, travel costs of £3.2 million, utility costs of £3.2 million, housekeeping and hospitality costs of £0.9 million, information technology and telecoms costs of £3.7 million, depreciation costs of £3.3 million, and other costs of £5.7 million.

 

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Duchy of Lancaster

• Revenues from the Duchy of Lancaster are part of the Privy Purse. It is dedicated to the royal family's expenses that are not met by the Sovereign Grant. It's also taxed, as long as it's not used for official purposes.

• The revenue was £28.6 million in 2022/21, which is an increase from £27.5 million in the 2021/20 financial year.

• The Duchy of Lancaster had operational costs of £3.8 million and administrative expenses of £1.5 million in 2021/20.
• In 2022/21, operating costs were derived from two key cost centers. The first cost center was property expenditures covering the following types of properties: commercial, agricultural, residential, and mineral royalties. In total, the expenditure on properties was £2.1 million during the financial year. The second cost center was staff costs, administration, and professional fees, which totaled £1.5 million.

Duchy of Cornwall

• Duchy of Cornwall covers the expenditures of the Prince of Wales and The Duchess of Cornwall as well as the expenditure from the Duke and Duchess of Cambridge.

• The FY2021/20 revenues were £37.1 million, which is a decrease from £45 million in FY2020/19. Its revenues were derived from property income, sales of goods, and feed-in tariffs.

• The operating costs amounted to £15.9 million in 2021/20, which is a decrease from £20.3 million in 2020/19.
• Operating costs for 2021/20 included staff costs amounting to £5.8 million, the direct cost of sales of £3.4 million, depreciation of £1.3 million, repairs and maintenance costs of £2.9 million, administration expenditure of £2.2 million, and other operating costs of £1.2 million.

The Royal Collection

• The Royal Collection features works of art that are held by the royal monarch in trust for their successors and nation.

• In FY2022/21, the Royal Collection raked £24 million in revenues, which is an increase from £6.6 million in 2021/20. The revenues of the Royal Collection came from donations and legacies, charitable activities, trading activities, investments, and other income.
• In FY2020/21, 0.6 million people viewed items in the royal collection. It is a drop from 7.9 million in 2019/20. The drop in visitors is because of the closure of royal palaces museums, and galleries in the face of the COVID-19 pandemic.

• The total expenditure of the Royal Collection was £39 million in FY2022/21, which is a decrease from £43 million in 2021/20. Notable expenses for the Royal Collection include fundraising, charitable activities, and other expenses.

Impact of the British Monarchy on the UK's Economy - Indirect Revenue Streams

• Royal-themed memorabilia, food, and other goods are sold by British businesses to locals and foreigners generating revenue for the UK economy. In addition, royal-themed TV shows such as The Crown generates revenues for UK businesses.

•  Millions of visitors visit the Royal Collection and royal castles generating revenues for the royal family and the United Kingdom.
• Royal ceremonies attract visitors to the United Kingdom. For example, the royal wedding between the Duke and Duchess of Cambridge led to a 28% increase in Eurostar bookings to the UK.

• British products that were granted trademarks to use the royal family name in their products as well as general British products achieve higher sales opportunities due to the royal family brand.

Indirect Contribution to the Economy

• There are no recent estimates that quantify the indirect economic impact of the monarchy on the UK economy from the sources described above. However, in 2017, Brand Finance published a report that calculated the total direct and indirect contribution of the royal brand to the country's economy.
• As per its findings, in 2017, the monarchy contributed £1.77 billion to the UK economy, out of which tourism accounted for £550 million, the Crown Estate surplus - £329 million, and informal endorsements - £200 million. The chart below presents all contributions.

 

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• The total public cost of the monarchy was estimated at £292.6 million, or £4.50 per capita, in the same year.
• It is worth noting that in a 2022 article by Global News, Brand Finance Canada was quoted on the estimation that the annual economic contribution of the monarchy to the UK economy is £2.5 billion, while the cost is £500 million. However, it is unclear whether it is a new estimation or the 2017 one adjusted for inflation and other factors.

Research Strategy

Key Takeaways

• Though the official cost of the Queen’s funeral is not available to the public, it is expected to be expensive. State funerals are typically organized to observe strict rules of protocol to honor a person of national importance, and the Queen’s funeral will be the first since Sir Winston Churchill’s in 1965. £6 billion has been estimated for the costs of both the funeral of the Queen and the coronation of the new King.
• According to Simon French (Chief Economist at British Investment Bank, Panmure Gordon), "previous one-off bank holidays reduced economic output by at least £2 billion, although predicting in this case is mostly difficult because it could go beyond an extra bank holiday to a lengthy period of nationwide mourning, which might result in about 0.1% decline in the economy in Q3."
• Experts foresee a growth in domestic and international tourism continuing a long way after the official mourning period. Retail sales of queen-associated merchandise are also soaring, with the influx of well-wishers into London. The sales of souvenirs associated with the Queen’s funeral could increase by £60 million, according to Mirabaud brokerage.
• Using the economic impact of the Queen’s Platinum Jubilee celebration in June as a basis for September predictions, Pantheon projection calls for a decline of 0.2% in September GDP. The funeral and coronation expenses, along with related costs due to the closure of banks, businesses, and the stock markets, as well as other institutional costs, will impact the GDP by about £1.2 and £6 billion, according to the Independent.

Introduction

Direct Expenses

• Following the death of Queen Elizabeth II — Britain's longest-serving monarch, plans for her official goodbye are in motion for the funeral scheduled for Monday, September 19 in London. Although the official cost of the event is not available to the public, it is expected to be expensive. According to the pre-planned arrangements for the Queen's funeral, which depended on her place of death, Operation Unicorn has kicked off — since she died at Balmoral.
• State funerals are usually organized to observe strict rules of protocol, held to honor a person of national significance. Since Sir Winston Churchill’s funeral in 1965, the Queen’s will be the first state funeral. In 1997, an estimated £3 to £5 million pounds, the equivalent of about $11 million by today’s value, was spent on Princess Diana’s funeral. In 2002, the Queen Mother’s funeral was reported to cost about $9 million (£5.4 million). Due to COVID-19 restrictions, there was a much smaller procession at the Duke of Edinburgh’s funeral, and consequently, the expense was significantly less.
• According to Emily Stedman (Journalist and Royals Researcher), the Queen Mother’s funeral is a potential benchmark for what to expect, however, the “relatively shaky economic climate” in the UK, could get the royal family to cut back on the ceremony’s grandeur. A massive £6 billion has been estimated for the costs of both the coronation and the funeral of the Queen.

Indirect Economic Cost

• Since the Queen’s death, some business and diplomatic meetings were canceled, Premier League soccer matches were rescheduled, the second day of the men's cricket test match was postponed, while across London, some leading stores and tourist sites plan to close their doors to business, as a mark of respect. Since her coronation in 1952, the Queen’s portraits and signature has been on various things, including, flags, stamps, bank coins, and notes. Unpicking her image, name, and iconography from the structure of UK’s national life and across the Commonwealth might take a long while.
• According to Pantheon Macroeconomics researchers, the bank holiday for the Queen’s funeral is expected to negatively impact the UK economy. Simon French (Chief Economist at British Investment Bank, Panmure Gordon) stated in an interview that previous one-off bank holidays in 2002, 2012, and earlier in 2022 reduced economic output by no less than £2 billion. According to him, predicting is particularly difficult in this case, since it could go beyond an extra bank holiday to a lengthy period of national mourning. And this could shrink the economy by 0.1% in the present third quarter.
• While Queen's commemorative public holiday will leave some businesses in the lurch, others stand to benefit from it. As eyes globally are fixed on the UK this time, experts foresee a rise in domestic and international tourism continuing a long way beyond the official mourning period. With sympathizers flocking to London, retail sales of queen-associated merchandise are soaring. According to a projection by Michael Bloomberg of Lambert Souvenirs — a shop close to Trafalgar Square — the demand for Queen-related products would continue to surge until about a month after the funeral. Souvenirs sales in relation with the Queen’s funeral could increase by £60 million, i.e., about €69 million, according to Mirabaud brokerage.

 

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Impact on the UK Economy

• According to an economic forecast, the death of Queen Elizabeth II could push the UK’s already-stretched economy into a “technical recession.” Recent economic data reveal that the growth of the U.K.’s gross domestic product (GDP) was weaker in July than expected, and another successive quarter of decline could drive the country into a recession.
• The Queen’s Platinum Jubilee in June was celebrated with two additional public holidays. Using the economic impact then as a basis, the projection calls for a decline of 0.2% in September GDP. Pantheon prediction notes that the impact of the September 19 holiday might be more than June’s because some companies that stayed open then may show their respect by closing for the funeral. Although the recession risk associated with the holiday is highlighted in the report, it is anticipated that the GDP will hold solid with Q2 figures, just as much as necessary to carefully avoid recession in Q3.
• After the 0.6% decline in June, the UK’s GDP recorded an increase of 0.2%, according to the Office for National Statistics. Yael Selfin (Chief Economist at KPMG UK) stated that "the weak GDP in June propelled the shaky 0.2% bounce back in July, and stayed lower than May levels, indicating overall tightening throughout the first two months of summer."
• According to the Independent, considering company closures, the bank holidays, funeral expenses, coronation costs, changes to passports, currency changes, military and police uniforms, and other slight institutional changes, Queen Elizabeth II's death will likely cost the British economy between £1.2 billion and £6 billion.

 

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Research Strategy