No-deal Brexit: Consumers will foot the bill | Fin24
 
In partnership with
  • Electric Car Tax

    Electric vehicles in SA are being taxed like luxury cars, which has reduced their popularity.

  • New Premises

    KPMG says it's on a journey of renewal as it opens its new Cape Town office.

  • Fin24’s newsletter

    Sign up to receive Fin24's top news in your inbox every morning.

Loading...

No-deal Brexit: Consumers will foot the bill

Mar 09 2019 08:30
Lameez Omarjee

If there is a no deal Brexit come March 29, then UK consumers will have to face rising prices - which will have a knock-on effect on businesses elsewhere as cash-strapped Brits try to cut travel expenses, a conference heard.

On Wednesday a panel of experts in the tourism sector weighed in on the impact of Brexit, at the 53rd Internationale Tourismus-Borse (ITB) world travel trade show in Berlin, Germany.

Bad for business

Just 23 days before the official day the UK will leave the EU, uncertainty about negotiations still persists, and this is bad for businesses and consumers, Caroline Bremner of market research firm Euromonitor International said.

"What we see is that consumer confidence is trending down, business confidence is trending down, and [that] will have an impact on [UK] GDP," she said.

Leaving the EU without a deal would have a negative impact on the pound sterling. The UK would also have to revert to the World Trade Organisation rules, which would result in shocks to its economy, and the pound could lose another 1%, Bremner said.

According to Christoph Debus of global tour company Thomas Cook Group, consumers will bear the brunt of the uncertainty of Brexit being just three weeks away.

"At the end of the day, the bill will have to be paid by consumers. It is unacceptable. Decision makers must come up with solutions," he said.

Tourism will suffer

Speaking specifically on the impact on tourism, Debus believes that the connectivity crated through the agreements of the EU have been more beneficial than harmful. "Connectivity in the EU has never been better than it is today," he said.

Anything that would put connectivity "in danger" would put the entire tourism industry in danger. Debus expects tour operators to feel the dip before airlines do.

"It will be interesting to see what happens in the next few weeks.

Bremner described Brexit as a spanner in the works for destination and travel brands which are trying to reassure consumers so that they can continue to book holidays with confidence.

'Counter-intuitive'

"Brexit is so counter-intuitive to what consumers want, even though the British population voted for it. It’s very hard to square a circle," she said of the situation.

The currency effect of Brexit means that consumers will have less spending power and that tourism businesses will have to offer better deals and flexible payment arrangements, she suggested.

Bremner also noted that there may be a shift in holiday destinations to countries like Egypt, Turkey and Tunisia. These countries are competitive with their pricing, and other destinations will have to consider this when targeting "price sensitive" UK consumers.

Debus also believes the British will continue to travel. "Cornwall is beautiful but you can't guarantee the weather. Trust me, they will continue to travel," he said.

SA 'value for money' for Brits

On the sidelines of the conference, SA Tourism CEO Sisa Ntshona said SA might prove to be an attractive destination for increasingly cash-strapped Brits.

Ntshona said it appeared the British may be "staycationing" or not travelling for their holidays. But he believes there are opportunities in everything.

"SA has always been a value for money destination for the Brits. The cost of food and drink are very competitive with the pound in hand," he said.

"We will be watching closely. There are a lot of 'ifs, buts and maybes', but we need to see where it goes," he said.

*Fin24 is a guest of SA Tourism, which is exhibiting at ITB Berlin.

NEXT ON FIN24X

 
 
 
 

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

Do you think government can solve the Eskom crisis?

Previous results · Suggest a vote

Loading...