London is a famously expensive destination. It’s also one of the most popular dream destinations for tourists – us included. So, travelers may be looking at the UK’s break with the EU differently than others. While there is plenty of debate over the wisdom of the Brexit, and effects that will ripple around the world through coming years, everyone who has the UK on their Bucket List is wondering one thing: Is the Brexit an opportunity to visit the UK for less?
The short answer is yes. And no. No, because relative to places like Hanoi or Warsaw, historically on the lower end of the cost index, travel to the UK, and London in particular, is not likely to slide to the bottom of the Budget Buster Scale. But, in many ways, yes; travel to and in the Kingdom may be more affordable for many.
Your (Insert Currency Here) is Worth More
By the end of Day One, A.B. (After Brexit), the pound had taken a beating, down against all major currencies. The practical upshot for travelers is that your currency is worth more today in the UK than it was yesterday. Good news if you’re visiting now or in the near future. That is likely to rebound in time, so “first movers” are likely to benefit the most.
In the long run, things may not be so rosy. The Bank of England is predicting a recession as the effects of leaving the EU take effect, and warns of inflation from the suddenly higher cost of imported goods and materials. Your dollar may continue to be worth more but, once in-country, your costs may eventually be higher.
The Quid Slid: After hitting a high point for the year just before the Brexit vote results were announced, the British Pound sunk to its lowest level in 30 years as the world reacted to the voters’ decision to leave the European Union. (Chart: Reuters UK)
Air Fare May Go Down…
…but a lot depends on where you’re coming from, and where you’re going to. Many fares to the UK have already dropped, simply because local currencies are worth more relative to the Pound. That makes today a great time to start shopping for your flights to Europe and the UK. On the other side of the pond, a weaker Pound means even fewer Brits will be exploring the world. That may translate to cheaper flights as airlines try to lure other travelers to make up the difference.
But the positive benefit of a strong dollar may be very short lived. While fares to Europe and the UK went down after the vote, operating costs for many carriers went up at the same. Jet fuel is priced in U.S. Dollars, which means England is paying more at the pump today, and will continue to do so until the Pound strengthens.
While currencies have an immediate effect, there are bigger – and deeper – implications for the aviation industry. As the UK leaves the European Union, travel patterns are expected to shift. Investors foresee a reduction of business travel in and to the UK, which means lower demand for flights. Post-Brexit, analysts expect fewer flights and higher prices.
Low-cost leaders Ryan Air and easyJet have warned that Brexit could be the end of their cheap UK fares. (Photo: RyanAir)
Airlines May Go Down
Airlines may be the first casualty in this battle. The day after the Brexit vote, all UK airline stocks took a plunge. British bank HSBC downgraded all European air carriers to “reduce” recommendations, prompting investors to sell. IAG Group, the parent of British Airways, already downgraded earnings expectations due to Brexit impacts. Even American carriers, who get less than ten percent of earnings from the UK, were down. Around the world, stocks reacted badly to the vote, but airlines were particularly hard hit.
Another problem, and probably the biggest headache for the airlines, is that new agreements must be forged with EU nations. Previous to the Brexit, the UK enjoyed being part of the EU’s single aviation market, which allows airlines to fly freely to and within member states. Industry experts expect the UK to work out an agreement to remain part of a single aviation market, but there are no guarantees and, so far, no timetables for when that will happen.
Travel Without Borders
One thing that will not change is the ease of traveling to and through the United Kingdom for most foreigners. European border crossings were largely abolished by the Shengen Agreement, which is distinctly different than the European Union. Under that agreement, 26 European countries operate much like a single state with no internal border controls. The UK and Ireland had an opt-out opportunity at the Shengen Convention; they declined to use it then, and are not expected to now.
Globalism Relies on Tourism
Many see the Brexit vote as a strike against Globalism but, as travelers, we know the true drivers of globalization are not governments, but their citizens. As global citizens, we know that any opportunity to see new places and meet new people is golden. In the short term, the Brexit works in our favor. In the long term, as global citizens, our travel can help ensure it does not leave the UK isolated.
*Apologies to Hubert Selby, Jr. and Mark Knopfler. This post has absolutely nothing to do with the controversial book or the excellent movie soundtrack Last Exit to Brooklyn, we just liked the sound of it.
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/We are headed to Britain in a few weeks. I am soooo glad that I procrastinated in changing my USD into GBP. I would have really been kicking myself if I had done it before the huge drop.
Ha! Finally, putting things off actually pays off! It’s all about finding the silver lining, right?
This was a good summary of major implications. We will see where things settle down. We have often used London as our gateway to Europe. May be an even bigger bargain in the short term!
Hi Linda – thanks for your comments! We’re all for bigger bargains! At least, if the “doom & gloom” guys are right, maybe increased tourism will offset any damage. Hey, if it helps, we’ll go visit London! 🙂
Very interesting post. I was asking myself the same thin: could we get a break on travel now that the British broke free? One thing is for sure, their tourism will surely pick up this summer. I should go buy some pounds myself for future travels. It may be a while before their currency picks up, but it’s definitely going to happen.
Thanks Anda – I was thinking that the British seemed to survive just fine for a couple thousand years…I’m sure they’ll be okay in the long run! 😉 We are definitely going to grab a few pounds (the good kind!) to tuck away for future travels. And we have family traveling next month, so it’s timely for them. Thanks for your thoughts!
We stayed up late to watch the Brexit results: History in the making. Britain did so well before entering the EU that I’m sure they will survive this transition quite well. I’ll bet tourism will help. As you said, the declining GBP means that Britain is on sale for tourists. We are seriously considering a visit. How about you?
Speaking of getting your money’s worth on travel, it will also be interesting to see what happens with currencies worldwide, as it sounds as though they are all about to be rebalanced. Last I heard, you can get 15,000 Indonesian rupiah per dollar, but word has it that rate won’t last. Maybe I should buy some of the undervalued ones now, so I’ll still be able to travel to places like Bali and Africa, lol.
On a political note, this Brexit video (https://www.youtube.com/watch?v=UTMxfAkxfQ0) helped me understand why so many Brits wanted to exit. I learned so many things about the EU that I wasn’t aware of, and some were pretty shocking.
Hi Linda – We stayed up late to watch, too, and I do think that, in the end, GB will be just fine. Interesting thought on buying currency. Those values are great reasons to visit some places sooner than later! Thanks for your thoughts – We’re going to have to watch the currency markets for deals!
Very interesting analysis! You guys are the first ones I read that point out the possibility of a positive outcome. I was reading some British websites and they mainly focus on low cost carriers increasing their prices…
Hi Renata – I think there are positives for travelers (except air fare going up because of fuel costs), but I’m not so sure there will be many for Brits. At least, not in the near term. Down the road, I’m sure they will be just fine and will be welcoming world travelers regardless of how much the Pound is worth. It will be interesting to watch, politically. Will Scotland leave? Will Ireland unite? Who knows, now?
Wow – you were fast with your post! I can’t say anything about Brexit as a Swiss but the reason why makes me sad. The vote should have been earlier though as our travels in the UK almost come to an end and we can’t profit to much from the low pound anymore.
Hi guys! We were really curious about the effect on travel (we have family members heading there next month), and thought many more would be, too. It’s a great opportunity for travelers, and an interesting time for UK and Europe. We were sad to see the Brexit vote, too, but understand the reasoning. Which is also sad. If nothing else, maybe it’s a good opportunity to build stronger relationships. And it’s certainly going to bring more travelers to the UK this year! (Sorry you’re missing out on the savings!) Thanks for stopping by our blog!
ok, so there might be a few positive sides after all?:) I was personally very saddened by their decision. #the weekly postcard
Us too, Tanja – I know there are some legitimate issues, but it seems there must be a better way to work through them. We just hope they haven’t opened the door for worse troubles. Thanks for stopping by our blog again!
well, I was really saddened by their decision. and it’s probably going to have a lot of bad repercussions for them, and less for the EU.or maybe not.but I don’t think that it will affect badly travel. I still want to go to London again, for the 12th time:))
I think you’re right, Tanja – the effect on travel will probably be good. I’m sure things will eventually be just fine, but I do worry about the predictions of inflation and recession, and hitting the poorest 10% the hardest. At the same time, I know there are serious problems to address. Though I’m not British, I do wish the best for our friends “across the pond.”
yes, it’s tough to know now what will happen but I hope things will be ok for everyone:)
We were in England during the Brexit vote, very interesting indeed. I’m not sure what it means in the long run, but I do hope travel expenses will go down.
Hi Corinne – I bet that was something. We’re with you on the expenses, but do worry about the impact on average UK folks. Hopefully, this ends up being the best of both worlds. Thanks again for visiting our blog!
There’s so much hyperbole and the Brexit vote is so new that it’s too early to tell what’s going to happen. I do hope that travelers get a break for their budgets but hope the inflation doesn’t make life too hard for tourism. Whew!
Hi Elaine – I think what disappoints me most, as an American, is to see that the UK – always the model of civility and intellectualism – looked so much like the US in the campaigning. I do think the market responses were a bit overblown, but I also hope the recovery finds at least a little bit of a break for us travelers! Thanks again for visiting our blog.