The Net Times: Royal Baby Adds Princely Sum to UK Economy

Brand Finance has released an update of its much publicised valuation of the Monarchy to coincide with the birth of the latest member of the Royal Family.

The leading brand and intangible asset valuation agency predicts that William and Kate's son will boost Britain's economy by £521m (US$800m) over the long term. A combination of; a short term boost to souvenirs, memorabilia, food and drink; a longer lasting uplift to related products such as pushchairs and clothing; and the benefit of improved consumer sentiment is behind the impressive figure.

The overall contribution of the Monarchy to the British economy this year is £1.5bn (US$2.3bn). Though the Jubilee year of 2012 provided a slightly bigger boost through commerce and PR value to 'Brand Britain', the additional economic cost of a bank holiday reduced the net benefit to £925m (US$1.4bn). Meanwhile the value of the Monarchy as a whole, which includes economic benefits (net of costs) into the future, plus the tangible assets of the Crown Estate and Duchies of Cornwall and Lancaster, has risen from £43bn (US$68.5bn) last year to £53.6bn (US$83.8bn).

Brand Finance Chief Executive David Haigh commented, "The Monarchy is one of the most valuable of all British brands. Whatever one thinks about the constitutional principle, there seems little doubt that the institution of Monarchy adds significant annual earnings and long term economic value to the UK. The Monarchy is a powerful endorsement for individual and company brands and the latest Windsor will be an effective and lucrative ambassador for Brand Britain, making a significant contribution to the task of driving Britain out of the recession."

The Royal Baby Boost

	(£m)	(US$m)
Improved consumer sentiment & PR for 'Brand Britain'	208	319
Food	25	38
Drink	62	95
Souvenirs	56	86
Toys	24	37
Books	40	61
DVDs and other media	36	55
Exported memorabilia	37	57
Pushchairs effect (related products)	33	51
Total Benefit	521	800

Source: Brand Finance plc

Jubilee Year 2012 vs Royal Baby Year 2013 - Benefits and Costs of the Monarchy to Briatin

Benefits		2012 (£m)	2013 (£m)
Leisure, Tourism and Accommodation	Leisure and Accommodation, Palace Visits, tourism connected to the monarchy and its heritage etc	600	504
Jubilee	Special Event Merchandise	66
	Improved consumer sentiment &PR	540
	Leisure and Accommodation Uplift	324

Royal Baby	Improved consumer sentiment & PR		208
	Food		25
	Drink		62
	Souvenirs		56
	Toys		24
	Books		40
	DVDs & other media		36
	Exported Memorabilia		37
	Pushchairs effect (related products)		33
Royal IP	Royal Warrants	126	126
Royal IP	Coat of Arms	13	13
Estimated overall value of PR		518	450
Crown Estate	Operating Surplus generated by Crown Estate for Nation's Benefit	257	253
Total Benefit		2,443	1,866

Costs		2012 (£m)	2013 (£m)
Cost of Royal Family	Grants	-30	-31
	Draw down from Sovereign Grant Reserve	-2	-2
	Payroll	-18	-18
	Other Staff Cost	-1	-1
	Property Maintenance	-12	-9
	Travel	-4	-5
	Utilities	-3	-3
	Housekeeping	-2	-2
	Other Admin	-4	-7
	Duchy of Cornwall (lost revenue)	-25	-29
	Duchy of Lancaster (lost revenue)	-13	-19
	Communications and PR	0	0
	Security	-101	-102
	Cost to Councils	-26	-26
Cost of Additional Bank Holidays	Lost output	-1200	0
Total Cost		-1,442	-254
Net Benefits		1,001	1,612

Boost to the UK Economy (Discounted Net Benefits)		925	1,531

Source: Brand Finance plc

ENDS

Note to Editors

Brand Finance's original valuation of the Monarchy and accompanying report, produced in 2012, can be viewed here.

Methodology

Notes for Editors:

The value of the Monarchy 'brand' is derived by combining tangible and intangible asset values.
The tangible value of the Monarchy represents the value of the Crown Estate, the Royal Collection and other properties held.
The intangible value of the Monarchy represents the value of the uplift to the economy attributable to the Monarchy.
Brand Finance researched all revenue streams and costs which we believed were impacted by the Monarchy. These include tourism, spending on merchandise, the impact of Royal Warrants, security, transportation costs etc.
The valuation of Royal Warrants and Coats of Arms is based on notional Royalty Rates based on Brand Finance's experience and analysis. The Royalty rates used in the calculation illustrate what could reasonably be charged for the use of the Warrants or Coats of Arms in our opinion.
The Monarchy 'brand' calculation ignores tax as tax is paid to the Treasury.
The annual net economic benefit was forecast over a five year period from 2013-2017 ('The Explicit Period') using a growth rate sourced from the Office for Budget Responsibility.
A discount rate was applied to each forecast period in order to convert the economic value uplift to a net present value. The discount rate is employed in order to factor in the time value of money. The rate utilised was based upon the yield on UL 30 year bonds at the time of the valuation.
We also calculated the economic value uplift into perpetuity from year 5 (2017) by applying a perpetuity growth factor (using the 30 year compound annual growth rate of UK GDP) to the final explicit period's net economic benefit.