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Coronavirus: New UK bank holiday in October could boost economy by £500m

Cambridge is a tourist hot spot in the UK. Photo: Getty

Introducing an extra national holiday in October in the UK could boost the country's economy by £500m, says a leading economist.

The government is considering the proposal by tourist agency Visit Britain to offset some of the effects of the COVID-19 lockdown.

The holiday could be set around the October school half term break to extend the season and make up for lost earnings from the two May bank holiday weekends.

Douglas McWilliams, deputy chairman of the Centre for Economics and Business Research (CEBR), said an additional bank holiday could see retail, hospitality and catering services double their usual revenue.

 “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.

"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,” he added.

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His position is symbolic of a wider shift in thinking by the CEBR which previously asked whether the UK needed so many bank holidays.

In 2012, the CEBR estimated that the average bank holiday left the UK with a bill for £2.3bn due to lost manufacturing productivity.

But last year the think tank revised its position in view of other research suggesting more paid time off might provide an economic boost.

McWilliams has written about how the UK works 10% more than the Dutch but has a lower GDP per capita than the Netherlands. He argues that an increase in productivity could pay for more days off and suggested a four-day working week could help the UK’s finances.

He added: “So if one additional day off is a good thing, what about making it permanent and moving to a four-day week as is being suggested for New Zealand? Our assessment [is] cautiously positive, though making it work would require decisions to constrain public spending and to ensure that business costs did not rise.”