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Baby prince birth to be 'overwhelmingly positive' for UK economy

Catherine, Duchess of Cambridge, has given birth to a boy. Analysts say that the baby's birth should be a boon to the UK economy.
Catherine, Duchess of Cambridge, has given birth to a boy. Analysts say that the baby's birth should be a boon to the UK economy.Chris Jackson / AFP - Getty Images

Catherine, the Duchess of Cambridge, delivered a boy Monday afternoon local time, an event analysts said would likely be "overwhelmingly positive" for the U.K. economy.

"The impact on the U.K. economy is likely to be limited — albeit overwhelmingly positive. At the margin, 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 research note.

The child of Kate Middleton and Prince William will be third in line to the throne. Middleton gave birth in the private wing of Saint Mary's hospital in London. The boy, whose name was not immediately revealed, weighed 8 pounds, 6 ounces at birth.

(Read More:UK recovery hopes buoyed by improved earnings)

According to the U.K.'s Centre for Retail Research, the royal birth will boost retail sales by £243 million ($372 million) between July 1 and August 31. The Centre forecast that £87 million ($133 million) would be spent on food and alcohol for parties to celebrate the birth, while £156 million ($239 million) would be spent on memorabilia.

"The most obvious support to the economy coming from the royal birth will be some boost to retail sales through people buying souvenirs and commemorative items, while there is also likely to be a small lift to alcohol sales as some people will want to toast the royal baby," said Archer.

The Centre forecast that sales of prams (baby carriages) and pushchairs (strollers) will rise by 13 percent, as parents upgrade their own to match the royal baby's.

"The baby carriage will become a must-have status symbol and the lucky manufacturer can expect a similar boost in sales to that achieved by iCandy peach when Victoria Beckham adopted one for her daughter, Harper," the CRR said. After Beckham's purchase, sales of iCandy's stroller grew to £9.6 million in 2011, up from £3.6 million in 2009.

U.K. retailers are already familiar with the "Kate effect," with sales of what Middleton wears or uses soaring. For instance, when Middleton wore a nude "bandage" dress by Reiss to the White House, the brand was propelled onto the international stage. It is now stocked at Bloomingdale's.

(Read More: Retailers Jump on Kate's Baby Fashion Bandwagon)

Some retailers have already benefited from royal baby enthusiasm, with shares of baby products retailer Mothercare rising 2.14 percent on Monday. This came after brokerage Panmure Gordon upgraded its rating on the high street stalwart from "sell" to "hold" last Friday, citing "irrepressible momentum with respect to sporting and royal baby news."

Mothercare is hoping to cash in on royal products including "Born to Rule" sleepsuits and "Princess/Prince in training" bibs.

The firm's chief executive, Simon Calver, told the Financial Times on Friday that a royal birth was "always good news," after Mothercare posted its quarterly earnings.

"It brings with it the feel good factor, and there could be some uptick in the birth rate," Calver said.

Others who could benefit from the royal baby include bookmakers, with punters placing bets on the sex and name of the baby.

(Read More: UK bookmakers cash in on royal baby bets)

However, IHS's Archer warned that the U.K. economy might not see the same size of boost that it got after the royal wedding in 2011 and the Queen's Diamond Jubilee celebration in 2012.

"There will also likely be few, if any, street parties that the Diamond Jubilee and the royal wedding encouraged, so the boost to food and alcohol sales will likely be much more limited … another significant difference … is that there will not be the great pageantry and celebratory public events, which likely had some beneficial impact in lifting tourism."

On the plus side, the high foreign media coverage helps advertise the U.K. globally, said Archer. In addition, no public holiday has been granted, which means economic activity should not take a hit.

"The extra public holiday relating to both the Diamond Jubilee celebrations and the royal wedding did have a negative impact on the economy through hitting output and services activity, as well as limiting retail sales on the day in question," he said. "While some of this lost economic activity was subsequently made up, there was undoubtedly a significant overall loss from this factor."

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