CEBR: £8.6 Billion Boost to UK Economy from Leap Year Day, Impacting Growth by 0.3 Percentage Points

March 19, 2024

Cebr analysis published last week considered the effect of the leap year day on earnings. In this short follow-up note, we present our estimates of the GDP impact.

Though higher frequency economic statistics are seasonally- and calendar-adjusted, meaning the impact of extra working days is largely smoothed out, there is no adjustment for leap days in annual data. As such, the additional day will provide this year’s economic output with a purely mathematical boost.

GDP measures the monetary value of goods and services produced within a country in a given period of time. With 2024 being a leap year, the period of measurement is longer than usual. Meanwhile, this year will have two other working days through one less weekend day and one less bank holiday, which will also have a real effect on activity. This is because output generated during a given workday outweighs that of a weekend day or public holiday. However, this impact will likely be taken out of the official statistics as part of the regular working day adjustment process.

Combining Cebr’s forecast for GDP with the split of activity across weekdays and weekends, we estimate that the economy will receive a boost of £8.6 billion due to this week’s extra day, which will be captured in the official 2024 data. This will be split between additional consumption of £5.1 billion, extra investment of £1.7 billion, and the remainder from other channels of activity. Across the other additional workdays, a real output boost of around £6.3 billion is anticipated. This takes the total real impact of working day fluctuations to around £14.9 billion.

At a time when the UK economy is suffering from sluggish prospects, the leap day boost would represent a welcome and meaningful contribution to GDP. Indeed, the extra activity could contribute 0.3 percentage points to annual growth. The converse, of course, is that 2025 will suffer a downward effect by having fewer days than this year. By then, however, it is expected that sustained improvement in economic performance will be more than sufficient to offset this.

Source: Centre for Economics and Business Research (CEBR)
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