Speak to any economist and they will tell you two things about bank holidays: Bank holidays have a negative impact on GDP; and don’t ask them to prove it.
Given the vast number of factors that go into economics, including weather, politics and even the general mood of the country, calculating the real life cost of a bank holiday is extremely difficult, if not impossible.
In 2012 the Centre for Economics and Business Research (CEBR), estimated that in a normal year each bank holiday made annual GDP about 0.16% lower, which in 2012 was £2.3 billion each.
Measuring the cost of bank holidays
At the time it described these calculations as “rough and ready”. In fact, they said bank holidays could even boost the economy by as much as £1.1bn… or be a loss of as much as £3.6bn.
That’s a big margin.
Why? Because there are so many factors involved. While some sectors “lose out” on bank holidays due to closures, other sectors see real benefit.
In fact, some sectors, including hospitality, build entire marketing campaigns around bank holiday weekends.
Another factor is that unlike the old days, not every business closes on bank holiday. Even some banks are open on bank holidays! Other businesses run Sunday hours, while others, despite being retail businesses, close like banks.
So as you can see, the cost of closed businesses is hard to measure and only one side of the equation…
When people are free from work and have a long weekend to enjoy, they are more likely to spend more money.
For special bank holidays, such as a royal wedding, there is a potential boost in tourism that can also impact the economy.
Despite households feeling the pinch, bank holiday spending is 120% more than regular weekends. On average, Brits are spending an extra £113 over bank holiday weekends.
They are also more than three times more likely to head to their local pub. With casual dining continuing to decrease, pubs are in a prime position to soak up that extra spending.
How are bank holidays affecting pubs?
According to Barclaycard, pubs saw a 19% increase in consumer spending during the May bank holiday.
Thanks to the hot weather we had over the summer, pubs have seen upwards of a 75% increase in revenue, with bank holidays being the focal point of these revenue spikes.
For pubs specifically, bank holiday revenue is spread across the whole weekend. People are more likely to stay out late when they know they don’t have work in the morning, or have an extra day to get chores done over the weekend.
How many public holidays does the UK have?
England and Wales have just 8 public holidays a year. This is fewer than every other country with a public holiday after Mexico, which has 7.
Scotland has 9, the U.S. has 10, while India and Columbia lead the way with 18 public holidays a year.
Despite being in the minority when it comes to public holidays, countries with higher GDP than ours, such as Germany and the U.S. have more. So, bank holidays can’t be that impactful to our economy in the long term.
Long weekends and four day weeks are also excellent productivity drivers. Despite having one day less to work, employees are more productive on those four days.
Ultimately, the CEBR concluded that scrapping every bank holiday would boost annual output by £19bn, but admitted the task of quantifying the impact was “difficult”.
Because you can’t put a price on the joy of a three day weekend.
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