Research: Government overestimates the cost of bank holidays

04 May 2022 2 min. read
More news on

Businesses across England and Wales are calling for the bank holiday celebrating the Queen’s platinum jubilee to be made permanent. While the Government anticipates any such change as coming at the expense of the economy, new research suggests there may be benefits which it has not considered, too.

England and Wales currently have eight bank holidays annually, in comparison with the European Union average of 11. This currently sees the countries rank outside the top 30 countries for public holidays – both in terms of pay and number of holidays – while 15 other European countries rank higher.

For years, the UK Government has resisted calls to change this – arguing that giving the nation’s workforce a day off would reduce productivity, and result in slowed economic growth.

Government overestimates the cost of bank holidays

Government modelling currently puts the cost of an extra bank holiday at £1.36 billion to that end. However, new research from Big Four firm PwC suggests that this may be an over-estimation, while it may also exclude other benefits of an extra day’s rest.

2022 sees the 3rd of June become a temporary bank holiday, in celebration of the Queen’s platinum jubilee. Business leaders have urged Prime Minister Boris Johnson to make it permanent, though, with a host of entities including the CBI, UK Hospitality, the Campaign for Real Ale, and Siemens each signing an open letter calling for a “thank holiday.” Such an initiative, they said, could honour public services after a difficult few years, as well as providing an economic boost after the pandemic.

PwC research commissioned by the campaigners suggests that the economic hit of a new holiday would be much smaller than the Government expects. Taking into account the impact on business of closures, disruption to production schedules, and premium payments to staff working on the bank holiday, the Big Four estimated the cost to be closer to £831 million – around £500 million short of Government forecasts. This could be even lower if the new bank holiday were scheduled for a Friday, the study added, as fewer hours are actually worked that day on average anyway.

At the same time, PwC pointed out that social positives might have been missed out by the Government’s analysis. Alongside the boost it would give to many workers who have been working under pressure for some time – potentially enhancing their productivity in the long-term – sectors such as retail and hospitality, which were badly impacted by decreased footfall during the pandemic, would likely enjoy an uplift in demand.

Since the relaxation of lockdown rules, many professional services firms have been readjusting their working week, to accommodate to the changing expectations of their staff. PwC and its competitors have notably offered their UK staff the chance to choose when they take leave from public holidays.