There has been a significant amount of debate surrounding the cost or otherwise of bank holidays to the UK economy. This year May is awash with four day working weeks as the country comes together to celebrate the coronation of King Charles III which is being marked with an extra public holiday.

Hospitality businesses and food retailers are already salivating at the prospect of extra pints being pulled and soaring sales of that quintessentially British quiche.

Greene King boss Nick Mackenzie reckons that pubs will get a ‘much needed’ boost as revellers put the cost-of-living crisis to one side and estimates that at his estate alone they will pour 1.8 million pints over the bumper weekend, with the chain helpfully crafting a coronation ale to mark the occasion.

Looking at last year’s Barclaycard spending data from the Platinum Jubilee weekend, Mackenzie has every right to be hopeful. Pubs, bars and nightclubs saw spending shoot up 74.2% compared to the same (albeit disrupted by the pandemic) period the year before and hospitality spend was also up by over 40% as people made the most of their time off with family and friends.

This is emboldening for an industry which saw 153 pubs lost from English and Welsh communities in the first three months of this year as pubs struggled with rising prices, particularly when it comes to energy costs.

WHICH SECTORS WILL BE CORONATION WINNERS?

In addition to pubs, supermarkets are in line for a big win from the coronation and extra bank holiday weekend. Although they will see opening hours cut, the celebratory nature of the day is expected to deliver the same kind of boost enjoyed by last year’s royal festivities. Figures from Kantar suggested that sales over the Platinum Jubilee were £87 million higher than the average in 2022.

But with food inflation still at uncomfortably high levels supermarkets will be using every trick in the book to pull in punters. Investors have already seen how that dance is impacting profit margins with Tesco (TSCO) saying its pre-tax numbers had been sawn in half in the year to February 2023.

Perhaps that’s why investors don’t seem won over by the potential gains of a bank holiday. Looking at the FTSE 350 in the two-week period on either side of the Jubilee weekend the only retailers to enjoy positive share price movement were Primark-owner Associated British Foods (ABF) and Ocado (OCDO) and not a single hospitality business made it out of the red zone.

B&M (BME) was the biggest loser over the period and travel operators National Express (NEX) and Wizz Air (WIZZ) made up the bottom three despite travel and leisure, retail and hospitality being sectors that traditionally benefit from bank holidays.

Nonetheless, it may not be that straightforward to look at share price reactions immediately before and after the events. In most cases, these extra bank holidays will have been known months in advance and investors will have priced in any benefits or disadvantages into market valuations well before the day.

WHAT ABOUT THE REST OF THE ECONOMY?

The rest of the economy comes to something of a hard stop. Looking back at UK economic activity in the months when the last four ‘exceptional’ bank holidays occurred you can clearly see the negative impact of giving Brits an extra day off work.

GDP fell significantly in both June and September last year and previous Jubilees had an even more discouraging impact on output.

While most shops, bars and restaurants will seize the day, many workplaces will shut and schools will also be closed for the bank holiday Monday, causing a major headache for parents working in sectors that remain open.

At a time when the UK is already struggling to find any kind of forward momentum the expected hit to economic growth will be an unwelcome one. Manufacturing, in particular, has been hit by supply chain issues and input costs and it is often the sector that struggles the most.

To put it in monetary terms government modelling puts the cost of these extra bank holidays at £1.36 billion though recent research from PwC has suggested that number might be closer to £831 million.

The hit to GDP is only half the story as the month following these ‘short’ working weeks usually results in a pretty significant bounce back.

Plus, there’s the feel-good factor to consider, with plenty of voices on hand to call for a permanent addition to the bank holiday roster, or even the introduction of a four-day working week, which they feel would boost productivity, something the country has struggled to achieve and something which has been trialled at a number of businesses over the past year.

WON’T TOURISM GET A BOOST?

Then into the mix we must add the cost of staging the grand shebang and the rather slippery tourism boost, something that is impossible to quantify.

But when you hear stories about Americans booking airline tickets to England as soon as King Charles’ coronation date was announced it is clear these big royal spectacles give the country a special status.

Prime minister Rishi Sunak might be a self-professed lover of mathematics, but I dare say even he would struggle to pull all the disparate numbers together and come up with a definitive answer as to whether these extra bank holidays are bad news for business or not.

But one thing investors can be sure of, even if the sun doesn’t shine, the extra day off is a chance to recover from the onslaught of economic data, as long as they ignore markets in the rest of the world.

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