In my unpopular view, the social benefits of an extra Bank Holiday are overstated, while the economic costs would be too high. But political realities suggest we’ll get one anyway, if the football gods allow!
An extra Bank Holiday would obviously be popular, and few politicians would be able to resist. Indeed, Keir Starmer has already indicated that he would call one for Friday 24th, to coincide with a trophy parade in London. I suspect the only difference if Andy Burnham were already in post is that he would insist the parade is held in Manchester.
The main argument in favour is that a Bank Holiday would be a great opportunity for a national celebration and to bring communities together. In my view, this exaggerates the importance of the Bank Holiday itself.
Most people would be delighted if England win and most of the benefits in terms of consumer confidence and spending would therefore follow anyway, even without an extra day off, and the parade could take place on the Sunday instead. Arsenal fans did not need a Bank Holiday to enjoy their special day.
The costs cannot be dismissed lightly either. The government impact assessment for the Queen’s Platinum Jubilee Bank Holiday in 2022 put the net cost to the economy at £2.4 billion. Some other estimates are lower, but they are still significant.
Both the benefits and the costs will also be unevenly spread. Not everyone will be able to take the time off, while some companies will be disproportionately hit. It’s one thing for small businesses to work around a Bank Holiday arranged months or more usually years in advance. But it would be quite another with just a few days’ notice.
By now some readers might be screaming – “typical bloody economist! knows the price of everything and the value of nothing…”
But if a single Bank Holiday cost the economy £24 billion, rather than £2.4 billion, would anyone still argue that it would be worth it? There must be some number that would change your mind…
In the real world, economists often have to put a monetary value on social costs and benefits, for example when assessing the cost effectiveness of a new treatment on the NHS, or the cost of preventing a fatality on the roads or railways. If you’re interested in the issues here, just search online for more on “QALYs”, or the “Value of a Statistical Life”.
One approach is based on willingness to pay. Just using some illustrative numbers, suppose 24 million households would be impacted by a Bank Holiday with a net economic cost of £2.4 billion. Would each household be willing to pay an average of £100 to cover the bill? I’m not convinced…
Unfortunately, whenever voters are asked whether they would support something that sounds appealing they are rarely presented with the costs and downsides. And as we know, very few politicians are brave enough to make unpopular choices, even when these would be in the national interest.
In the meantime, though, come on England!!
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