New fiscal policies introduced by the UK’s new Prime Minister, Liz Truss and her Chancellor Kwasi Kwarteng have seen the pound plummet against the dollar. What does this mean for travellers?
Buckle up for the week ahead on financial markets — the British Pound is absolutely crashing tonight, mostly because Boris Johnson was even worse than Biden… pic.twitter.com/LQN3ROEaEw— Steve Cortes (@CortesSteve) September 26, 2022
UK airlines RyanAir and Virgin announced they had effectively ‘hedged’ fuel purchasing, buying ahead to mitigate flux in the market. This means consumers may be sheltered from immediate air ticket hikes. But Willie Walsh, director-general of the International Air Transport Association, warned the BBC as far back as July, that flight tickets will cost more for travelers.
Flying will be more expensive for consumers, without doubt. Oil is the single biggest element of an airlines’ cost base. It is inevitable that ultimately the high oil prices will be passed through to consumers.Willie Walsh, director-general of IATA
2. Going to the UK
For visitors to the UK, goods and other purchases like assets or services will seem cheap. Tourists to the UK will benefit from the exchange rate, so some may well be tempted to make it a shopping trip destination, especially in the run up to Christmas for gifts and special food items.
Bear in mind though, the UK imports almost 50% of its food, so food prices will go up. And since oil is another major UK import, whose price is tied to the dollar, filling up your car in the UK will be pricier too.
3. UK spenders abroad
UK spenders will, on the contrary, find travelling and purchasing abroad an expensive option, as their sterling budget will not stretch as far as before the crash. This includes business buyers, who may look to reduce or cancel orders from suppliers abroad.
Trips to the US, and other winter destinations with currencies pegged to the dollar, such as the East Caribbean, will become particularly eye-watering for British holiday-makers. Meanwhile, Christmas markets in European cities might also be affected if UK tourists decide not to treat themselves to seasonal trips this year.