The UK government is to consider creating a new bank holiday in October 2020, which economists suggest could boost the economy by £500 million.
On 19 May, the government announced it would consider the possibility of creating an additional bank holiday later in the year, after the UK's tourism agency, Visit Britain, proposed the idea to help industries affected by lockdown.
The Centre for Economics and Business Research (CEBR)'s Deputy Chairman and prominent economist, Douglas McWilliams claims that an additional national holiday could help to add £500 million to the country’s economy, aiding the industries which have suffered the most due to the pandemic, including tourism, retail, and hospitality.
Do bank holidays help to boost the economy?
In response to the government’s consideration of Visit Britain’s proposal, a government spokesman has suggested bank holidays are actually costly affairs, saying it’s “worth acknowledging that extra bank holidays do come with economic costs.”
The CEBR has previously agreed with this statement, claiming in 2012 that an average UK bank holiday left the nation £2.3 billion worse off.
The question then posed by the consultancy was, “Do we really need so many?”
However, the company seems to have done a U-turn on its previous stance against bank holidays.
Last year, the think tank calculated that bank holidays had a much less of an effect on GDP than their 2012 estimations.
More recently, CEBR has used spending data from 2019 to predict that an extra bank holiday in 2020 could give rise to an additional £180 million spent in retail stores, while hospitality and catering industries could see an additional £40m.
In favour of a new day off work, McWilliams said on Monday 25 May that bank holidays usually see retail sales increase by around 15 per cent while hospitality and catering typically see a boost of 20 per cent.
However, there have been suggestions that a new bank holiday later in the year, when it is safe for tourism in the country to restart, would create an even bigger boost than normal, following months of lockdown causing large numbers of cancelled summer holidays.
McWilliams said “This year it would be quite likely that the boosts to spending in [retail, hospitality and catering] from an extra bank holiday after a period of enforced abstinence might well be double the usual boost, adding up to as much as £440m.
“There could well be a further stimulus from tourism boosting the UK economy by an additional £50m. So a rough £500m a day boost from more spending.”
How many bank holidays are there currently in the UK?
Compared to other countries internationally the number of bank holidays in the UK is low, with just eight taking place annually.
Spain currently has 14 bank holidays a year, while Sweden has 11 and France has 11.
The UK’s figures pale in comparison to the likes of Colombia and India who both get to enjoy a full 18 days off annually.
When will the government respond to the proposal?
Last week, a spokesperson for Downing Street said the government would "respond in due course" to Visit Britain’s proposal.