The additional day off, which has been endorsed by the Confederation of British Industry (CBI), would also be in recognition of the service of the millions who have stepped up to serve their communities during the Covid pandemic.

A spokesman for Mr Sunak on Monday confirmed he had asked Treasury officials to carry out an investigation into whether the idea is economically viable.

Treasury ‘institutionally allergic’ to the idea

A source added: “The Treasury is not saying no off the bat despite previously being institutionally allergic to the idea of a new bank holiday.

“Rishi is supportive of the campaign and the thought behind it and has asked for all the projected costs.”

The idea is understood to be gaining traction in Government as it struggles with how to tackle the cost of living crisis and encourage people back into offices. Ministers are understood to be keen to recognise how the public went over and above in their communities during Covid.

The move comes as a host of UK business leaders will write to the Prime Minister and the Chancellor on Tuesday to throw their weight behind the extra day off.

The CBI-backed group – which also includes UK Hospitality, leading brands such as Siemens, and business leaders Deborah Meaden and Dame Carolyn McCall – argue that the UK lags behind Europe when it comes to bank holidays.

England and Wales currently enjoy eight days off compared to Germany and France who have 11.

They also claim the cost of bank holidays is lower than previously stated.

Government overestimating cost of bank holidays

Research by PwC commissioned for the campaign has found that the Government’s existing figures overestimated the potential cost of a new bank holiday by 64 per cent and failed to account for the positive social and health benefits associated with bank holidays.

The research also highlights sectors particularly badly impacted by the pandemic – retail, hospitality and tourism – who would benefit greatly from additional economic activity.

Deborah Meaden, the Dragons’ Den investor, said: “The Great British Bank holiday is enjoyed by one and all across society. We all have fond memories of trips away, gatherings with friends, or just enjoying some relaxing time with loved ones.

“But it’s also a major boon for many businesses – especially those sectors that have struggled during the pandemic. I’m backing the campaign because I think it will be a fitting tribute to Her Majesty’s seventy years of public service, and that of all the people who make our communities kinder, nicer places to live.

“But I also think the Thank Holiday will provide the country with a social and economic stimulus we need after a difficult few years.”