Can you afford another bank holiday?
Can you afford another bank holiday?
While we were lounging away lockdown over another long weekend, economists have been busy trying to work out the impact of the extra national holiday currently being considered by government.
Brits look on enviously every year as many other countries enjoy several more nationwide days off than the UK, including Japan, which has double the number of collective down days.
But a possible October bank holiday, taking the UK total to only nine this year, may now be on the cards thanks to a bid by tourism agency, Visit Britain, after the typical holiday boost from two bank holidays in May were lost this year due to the lockdown.
Suggested for the October half-term, the day would probably be a one-off for 2020, akin to the nation holidays observed for significant events such as royal weddings – which cost the UK around 0.4 per cent of annual GDP according to some estimates.
But the decision can’t be made lightly.
With thousands of businesses closed, the lost economic output in sectors that wouldn’t get an income boost, such as banking or manufacturing, could be the equivalent of around £1.8bn at a time when economic confidence is in the doldrums and many companies have already suffered significant revenue loss.
But, as the tourism industry knows, spending on holidays, restaurants, entertainment and cultural events and the arts could boost sectors hit especially hard by lockdown and its lost bank holidays.
“Traditionally, retail sales are boosted by 15 per cent per day for a bank holiday, though the mix changes with a bias towards furniture, gardening and DIY,” says Douglas McWilliams, deputy chair of the Centre for Economics and Business Research, during this week’s bank holiday.
“Hospitality and catering are typically boosted by 20 per cent on a bank holiday compared with a weekend. At 2019 spending levels that would imply additional expenditure of £180m on retail and an additional £40m on hospitality and catering.”
In other words, we Brits eat, shop and tinker our way through your average bank holiday, but while all those benefits would be limited without a further easing of the current movement and travel restrictions, the economist suggests the containment measures to date could mean an even bigger spend than normal in response.
“This year it would be quite likely that the boosts to spending … 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,” McWilliams adds. “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.”
But with the debate over the extra day off so firmly focused on whether the nation can afford it, there’s the small matter of whether the individual can afford it.
With personal finances uncertain, the future of our salaries hanging in the balance, and at least two more bank holidays currently scheduled in for 2020, what will the typical extra day off set you back personally?
Research by American Express last year suggests those who make the most of a bank holiday by going away will spend an average of £235 if they stay in the UK, which we’re fairly safe to assume they would for now.
But there isn’t much data around on bank holiday spending by day, so we’ve done some number crunching.
If you are self-employed, there’s the immediate loss of income to contend with. Crudely, the average freelancer earns just under £14 an hour, so that’s the equivalent of £105 a day. Bear in mind though that, as with salaried roles, economists suggest the losses are recovered relatively quickly – often within a month or so.
As for spending, the Office for National Statistics suggests that the typical household parts with just under £586 a week overall. Or at least we did before lockdown.
Among our biggest spends are transport, recreation and culture, at a combined £157 a week. That’s the average working week though, so let’s conservatively say we’d spend double the average daily amount on a day off – around £45 per household.
American Express reckons we’ll spend £40 each every day over a bank holiday break on food and drinks, so per household per day, let’s say an extra £30 above what we’d usually part with.
In all then, we could be looking at just under £180 per household of extra costs per bank holiday, depending on individual circumstances. If, after many long months of isolation we go mad as economists predict, we could end up parting with £270 or more – very roughly – for a single day off, at a time when we should probably be saving as much as we can.
But then there’s the cost of not taking time out.
The impact of lockdown and the threat of Covid-19 on our mental health has been widely highlighted and for those who haven’t been furloughed, the stress of working in challenging circumstances, especially while juggling childcare, has taken its toll on millions.
Taking time out is a critical part of regulating our mental health, an issue that costs employers and the self-employed as much as £42bn a year, according to some government estimates, and we could definitely do to save a bit of that right now.
In a unique and highly stressful year, it seems that extra day off could be just what the doctor, and economists, ordered after all.