Following the referendum wholesale rates for GBP/EUR dropped as low as €1.17 and are now currently €1.19. At a travel money bureau you can expect rates of €1.15 or lower (incl. commission). These levels are as low as the financial crisis, and certainly lower than the €1.31 we saw before the referendum.
What does this mean if you want to travel abroad, are we going to be holidaying in Cornwall and Devon from now on?
According to thisismoney.co.uk the average British family spends £1300 abroad, with £782 on accommodation/travel and £529 on spending money. Assuming that travel and accommodation are booked through UK websites and paid for in pounds, that gives us £529 of exposure to foreign exchange risk. Other sources, such as EUstat, seem to confirm this figure. They state that British families spend on average £68 a day, in unbooked costs, during their holiday.
Taking these figures into account the table below shows how our spending has been affected by BREXIT.
|GBP/EUR||Average spending (£)||Average spending (€)|
|1.31 – 23rd June 2016||£529||€692.99|
|1.19 – 18th July 2016||£529||€629.51|
The average amount of Euros you can now expect for your holiday has fallen by €63.48.
Your holiday may be more expensive, and €62.48 is a significant amount, but it should not be enough to deter an escape from a British cloudy summer. The effects on European tourism revenue may, however, be profound. If Brits decide to still go abroad, but spend €62.48 less to make up for the weaker exchange rate, the European countries may find themselves with a €2.04bn shortfall. This is based on a figure of £17bn spent each year (Asdamoney).
BREXIT has made things a little more dear, but I argue that if you are planning a last minute trip abroad this summer, do not waste precious holiday time waiting for the pound to regain strength from the Euro. The exchange rate will fluctuate, but unless there is an imminent economic catastrophe the GBP/EUR will likely remain in the €1.12-€1.22 range (incl. travel money bureau commission rates), which would only save you €15 if you find yourself at the high end of that range.
Oh, and if you’re really concerned about lower spending power abroad, you may feel relieved knowing that over 30% of holidays are taken in the UK, which puts it as the top holiday destination for Brits. France and Spain take under 9% of the share.