UK holiday prices could be hit by booming world economy
Travel companies have been warned that European travel is likely to become more expensive as other world economies are growing faster than the UK, potentially driving up prices across the Continent.
India could overtake the UK as the world’s fifth largest economy by the end of this year and there is a ‘vast amount’ of new wealth in China, plus there is ‘an awful lot’ of Chinese tourism, said Nick Parsons, chief editor of payments provider OFX.
In contrast, the UK economy is forecast to grow at less than 2% a year for the next five years, its lowest for 70 years, said Parsons. "That has direct implications for tourism. The vast majority of travel from the UK is to Europe – 85% to 90% – and the problem is that the price for European travel is being set for the world economy that is growing rapidly."
He said it was vital that the UK economy grows at a faster rate than predicted by Chancellor Philip Hammond in this month’s Spring Budget speech, or the growth of the travel industry will be ‘anaemic at best’.
Parsons, an expert in global foreign exchange, warned delegates to ‘be prepared for disappointment’.
Speaking at the ABTA Brexit briefing, he urged against complacency following the recent rise in the value of sterling, warning that it could slide again in the future.
"A lot of businesses feel comfortable as long as the euro is no lower than 1.10, today it is 1.14, but do they have a strategy to prepare for 1.10? I would say think about your euro strategy, forward buy some of your currency requirements."
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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