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Turbulence for travel and tourism

Brexit and the resulting weakness in sterling, along with fears of terrorism, have created uncertainties in the travel and tourism sector
June 9, 2017

Would-be travellers may be feeling the pinch ahead of summer holiday plans this year. The value of sterling has fallen dramatically since the UK voted to leave the EU, and since wages have failed to keep up with price inflation, consumers' spending power isn't what it was. This squeeze on incomes could force many customers in the UK to rein in spending, leaving travel companies wondering where on the list of priorities a holiday will fall.

Earlier this year rating agency Moody's forecast that passenger growth in Britain's airline industry will slow to half the rate previously expected over the next two years due to a weak pound, coupled with economic uncertainty. While some airlines have felt the drag of sterling-denominated earnings in recent results, most have endured the turbulence so far.

The prospect of travel does not yet appear to be too bleak - at least not yet. According to the most recent monthly travel data from the Office for National Statistics (ONS), UK residents made 4.6m visits abroad during March 2017, up 5 per cent from the same time last year, and spent £3bn during their visit, 13 per cent more than the year before. On the flip side, weak sterling could help the UK by encouraging tourism since foreign tourists will see their currency go further than in years before. Overseas residents made 2.9m visits in March, up 11 per cent, and spent £1.5bn, 14 per cent more than last year, during their stay.

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