Travelling through Brexit
Brexit, Tourism and Travel
At Verkeer, we like to keep in tune with current affairs and how events might affect our clients. There is a great deal of questions around Brexit at the moment and where we will find ourselves in just a few weeks’ time. In this piece, we look specifically at how the travel and tourism sector will be affected by decision to leave the European Union.
The tourism industry is an important part of the British economy, to be worth £257 billion by 2025 or 9.9% of GDP. The EU has played a very important role in this growth as the main market for both inbound and outbound tourism. The Freedom of Movement directives have helped bring down barriers allowing people to travel to, from and around the EU with little issue. This coupled with harmonised regulation on the various forms of transport has revolutionised travel and made it accessible to a far wider range of the UK population.
There is understandable concern about the current level uncertainty and where we will be left in just a few weeks’ time. No one is quite sure what will happen particularly if the House of Commons cannot come to an to at least an interim solution which leads to a “no deal” exit. Even if the UK leaves on the basis of a deal negotiated with the EU there should be few immediate impacts on travel. However, this will which leave much of the detail of future relationships still to be worked out and there are a number of key areas which will need safeguarding in the longer term to ensure that the tourist industry is protected. These include:
- Maintaining our basic ability to travel to Europe and vice versa.
- Retaining visa-free travel between the UK and the EU.
- Protection of consumer rights.
- Continuing benefits from access to the Single Aviation Market.
These have been cited by a number of industry bodies as the main factors that need to be addressed in order to avoid extensive disruption.
A Brexit Deal
In the event that a Withdrawal Agreement is reached, then in the most part things, for the average tourist, will carry on as before, at least for the transition period running from 29 March 2019 to 31 December 2020. During this time, the future relationship will be drawn up and new arrangements will come into place thereafter. Judging by the draft Political Declaration which sets the framework future arrangements, it can be anticipated that these will mostly be favourable and not cause too much change.
Free to travel
There has been provision reached on short term – visa free – travel, with the text stating that there will be “…reciprocal visa free travel arrangements to enable UK and the EU citizens to travel freely”. The draft political declaration has also say that they wish to carry on with similar arrangements after the transition period. In addition to this, there have been agreements reached that allow us to continue in Europe-wide tourist protection schemes such as the European Health Insurance Scheme – both for those travelling to the UK and those going to the EU.
In terms of travel itself, which obviously facilitates the movement of tourists, there has also been progress that will ensure a smooth progression after the 29th of March, in the event of a Withdrawal Agreement being approved. Take aviation for example – it is agreed that life will carry on as before and flights will still be able to operate between EU and UK through the Single Aviation Market. The draft outline of the future relationship between the UK and EU also talks of the intention to create a ‘Comprehensive Air Transport Agreement’ in the future.
A no-deal Brexit would have a dramatic impact on one of the UK's most significant sectors
No Deal Brexit
The real uncertainty kicks in if the UK leaves the EU on 29th March without a deal in place – the default position as things stand. Though a range of provisions hav been put in place in case of this eventuality, these will mainly mitigate damage rather than stop it altogether. It has been forecast by the World Travel and Tourism Council (WTTC) based on economic modelling by the IMF, that there would be a £18.6 billion loss to British GDP in the event of No Deal – from travel and tourism alone. The WTTC have reiterated the points made above on areas that need to be protected. However, they also pointed out that in any circumstances “…a no-deal Brexit would have a dramatic impact on one of the UK’s most significant sectors”.
On borders, there could be substantial delays as, to the EU, the UK will be viewed a ‘third country’ and vice versa. It is estimated that this could add as much as 90 seconds per passenger. This is true not only at airports but also anywhere that there is a border, such as sea ports and the Channel Tunnel. The EHIC would no longer be valid – initially at least – pricing many out of travel altogether due to insurance costs. These factors and many more are bound to deter outbound as well as inbound travel.
That said, action has been taken to try to smooth the transition, in an attempt to minimise disruption. On aviation, an agreement has been reached that should ensure that flights still operate on exit day.
If pre-emptive measures work and travel disruption is kept to a minimum, there are some grounds for hoping that this may lead to a slight uplift in inbound tourism. According to research carried out by Oxford Economics, the weak pound may lead to an increase of 4% in people visiting the UK. However, the positive effect of this would largely be offset by the decrease in the amount of domestic tourism caused by the same factor and general economic uncertainty. Another imponderable is how many EU tourists would simply stay away from the UK because of changes in perception created by Brexit and the questions surrounding it.
On a side note, irrespective to if there is a deal or not, the European Commission has also confirmed that from the 2021 Brits traveling to the EU will face a charge. Under the European Travel Information and Authorisation Scheme (ETIAS), as a ‘third country’, traveling UK citizens will face a charge of £7, which will last for 3 years – much like the ESTA scheme in the United States.
Into the unknown
At the end of the day, the EU is our closest neighbour and makes up the largest market for both inbound and outbound tourism. If a deal is reached, then it is likely that this will be largely unaffected. If, however, we crash out on exit day without a deal in place then the UK will be in uncharted territory which no matter how much preparation has been underhand beforehand, might have a very negative impact on the industry indeed.
No sector of the British economy has a greater vested interest in seeing a deal concluded by March 29th than travel and tourism.