October bank holiday idea backed by think tank

Calls for an October bank holiday have been backed by an economic think tank which says the initial lost productivity cost would mostly be recovered “within a month”.

The government is currently considering the idea of an extra October holiday.

Parliament’s digital, culture, media and sport committee has floated the idea, with committee chair Julian Knight saying it will encourage domestic half term holidays and provide an opportunity to celebrate keyworkers.

Now the Centre for Economics and Business Research has backed the proposal, saying the initial cost to employers will be more than made up in expenditure in the general economy.

CEBR believes that with only eight bank holidays a year, the UK already lags behind other nations.

CEBR deputy chairman Douglas McWilliams said: “The case in favour of the holiday is that it should boost the retail, tourism and hospitality industries. The case against is that many companies, having already lost substantial revenues during the lockdown, are badly placed to absorb yet another day when they have to pay people for not working.

“Hospitality and catering are typically boosted by 20% on a bank holiday compared with a weekend. At 2019 spending levels that would imply additional expenditure of £40 million.”

However, McWilliams predicted it “quite likely” pent-up demand might mean “double the usual boost”, with domestic tourism adding another £50 million to this.

“Our very rough and ready calculation is that daily GDP might initially be reduced by £1.8 billion by loss of activity from an additional bank holiday but most of that would have been recovered within a month.”

The industry hopes a boost to domestic tourism will help offset the loss of inbound visitors, which is estimated to be £22 billion below forecast this year.

Visit Britain acting chief executive Patricia Yates has said she expects domestic tourism to take a £15 billion hit this year and believes the additional bank holiday would help extend the domestic season.

CEBR also floated the idea of a four-day week, but warned it would need constraints on public spending and must not increase business costs. It added: “If it is announced as a temporary measure, it will be hard to stop it becoming permanent.”