I saw a claim that an additional Bank/National Holiday if England won the Euros would cost the economy and pound £2.9+ billion. Why do bank holidays cost so much?

Question

Does extra spending on bars, entertainment, not cancel it out?

In: Economics

Answer 1

No, extra spending on bars, restaurants, DIY stores etc does not come anywhere near to cancelling out the loss of activity from all of the factories, offices and shops in the land that closes for the day.

The UK’s national income in 2023 years was £2.3 trillion. If we assume (inaccurately) that it is earned evenly across the year, then every day the country makes about £6.2bn (£2.2tn/365). It seems reasonable to assume there is more economic activity on an average Tuesday than on Sunday. So you might say that every Monday we take as a public holiday, if we lost all activity we might lose even more than £6.2bn.

Now in practice we don’t lose anything like all that. There are lots of businesses that do keep operating. There’s lots of economic activity that carries on regardless of holidays. There are days (Friday) where productivity is lower than other days and the impact of a holiday would be less. There are businesses that do *better* on holidays than on regular days.

But on a net basis, across the whole economy, the costs are estimated to be higher than the benefits.