Covid bank holidays would be the shot in the arm the UK economy so badly needs | Economic policy

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Ending lockdown, Boris Johnson once said, would be far harder than starting it. Governments prefer imposing controls to lifting them. Now he is set on what he calls “a one-way road to freedom”, he should do so with panache.

The most bizarre gesture of last summer’s brief lockdown respite was the chancellor, Rishi Sunak, halving the price of a restaurant meal in his “eat out to help out” campaign. A hundred million dinners were eaten to order, at the enormous cost of £522m. This threw a temporary lifeline to a hospitality industry that had felt unfairly persecuted by the first Covid lockdown – any food shop could sell alcohol while a pub next door was banned from even selling “off-licence”. No algorithm gave any indication of what Sunak’s gesture did for national happiness or wellbeing, but blame was placed at his feet for sparking the subsequent Covid wave and the lockdown that followed.

As of now, UKHospitality estimates one result as the permanent closure of 10,000 inns, cafes and restaurants, costing an estimated 640,000 jobs. Villages, towns and high streets may lose a third of their pubs for good, their fate finally sealed by the planning minister, Robert Jenrick, allowing their sites a change-of-use. As for shops, the British Retail Consortium’s Helen Dickinson reports that after a disastrous Christmas, sales did not recover and January growth declined “to its lowest level since May last year”.

This month, Britain’s success with vaccination has not been reflected in its economic outlook, which is now far worse than any normal recessionary experience. The National Institute of Economic and Social Research has announced that the UK will see one of the world’s weakest recoveries. The institute has slashed its last November forecast of 5.9% return to growth to just 3.4%. Unemployment will rise sharply as furloughs come to an end, reaching a savage 7.5% by the year’s end. Sunak’s continuing reliefs of VAT, rents and business rates may prop up otherwise collapsing private companies. But that is not what those companies most desperately need. They need demand, especially in the sectors of high-street shopping, leisure entertainment and hospitality – and they need it badly.

The money is there, staggering amounts of it set aside by those lucky enough to have had jobs this past year. The Bank of England’s economist Andy Haldane reckons £250bn is currently sitting untapped in personal and household savings accounts. This summer’s holiday season will be diminished by continued restrictions on foreign travel. People will be easing themselves back into commuting and office life, some with joy, others with anguish. Millions will be experimenting with new ways of dividing up their week between home and work. But one thing is clear. There will be money burning a hole in the pockets of those who have enjoyed job security. They owe it to the nation to go out and spend it.

This summer happens to be the 150th anniversary of that great British institution, the bank holiday. It was invented and passed into law in 1871 by a brilliant and eccentric MP, John Lubbock – when he was not championing Darwin, rescuing monuments, helping the poor and teaching his poodle to read. What better anniversary could he have than for Britain to break out of lockdown with not one extra “Lubbock” but four? There could be one on each of the first monthly Mondays after lockdown ends in May/June.

The government should declare these holidays a summer festival of local extravagance. As much as possible of that £250bn should be transferred from bank vaults into the retail and leisure industries at the maximum possible speed. The festival should be aimed not at the government-beloved “capital expenditure” but at renewing Britain’s battered high streets; at the pubs, restaurants, boutiques, hairdressers, bookshops, galleries, theatres and museums that have been so devastated by the past year. The festival’s patron saint would be John Maynard Keynes.

Of course there would be risks, as there have been throughout lockdown. There would need to be caution and residual social distancing. But at least the risks would be on the economic upside. The 2021 bank holidays would serve as a thank you to those who have worked so hard and a please to those who only want to work again. They would assert a quality Britain does not normally do well, rejoicing in freedom. Bank holidays need none of Sunak’s billions, just ordinary people with excess savings and encouragement to spend them.

Hafta Ichi
Source: The Guardian
Keyword: Covid bank holidays would be the shot in the arm the UK economy so badly needs | Economic policy

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