BREXIT: Breaks it or Builds it?

Introduction to Brexit

The immediate reaction of to the epoch-making referendum of BREXIT or “British Exit” has been mixed; while the EU skeptics rejoiced, others contemplated the far-reaching impact that this decision would have on the economy and global relations as a whole.

The immediate fallout of the referendum was the free-fall of the pound, hitting a 30-year low; this was followed by the resignation of the British Prime Minister. A new Prime Minister Mrs Theresa May took charge even as Britain geared itself to a life after Brexit.

The terms of separation stipulate that the actual severance from the EU would take two years, and the provision of the British constitution state that the invocation of Article 50 would signal the start of this two-year countdown. The new Prime Minister has, however, deferred the promulgation of Article 50 till next year.

The effects of Brexit are too many and as of now it would be difficult to predict correctly how wide the ripples are going to be felt. Brexit’s incidence is likely to permeate to all levels, from the economy to international relations and from immigration to travel and tourism; upheavals are going to take place before things finally settle down in future.

What it will mean for British Tourists

Perhaps the first and immediate concern of Brexit, with regards to travel and tourism, relates to British travellers who had hitherto enjoyed a free passage to other nations of the EU.

Just before the referendum took place, Deloitte was commissioned to study “What Brexit might mean for UK travel” and among their key findings, the following points were significant:

1.         There exists a strong flow between the UK and EU with respect to travel and tourism. For tourists from the UK, the EU remains their main destination. In fact it is also the main source market for overseas tourists coming to the UK. The unrestricted movement of goods and services, investment and people has contributed towards the promotion and facilitation of tourism and travel trade between the UK and EU. The report predicted that, if Brexit happened, then it would seriously impede free movement and affect the flow of travel and trade.

2.         Before Brexit kicks in, EU-originating regulations have benefitted and protected travelling consumers. Post Brexit, it will become necessary to replace them with parallel UK-originated regulations, so that that same level of consumer confidence is maintained.

3.         Immigrants make up a significant part of the workforce employed in the travel and tourism sectors in Britain. With Brexit, there is a possibility that the sector’s ability to recruit or employ foreign nationals, including those from the EU, could be restricted and this in turn could challenge many travel and hospitality businesses. Given the current levels of UK employment and existing skills shortages, it is quite likely that it could pose problems in filling a number of roles.

4.         A free-fall of the pound sterling after Brexit would make foreign currency destinations more expensive in sterling. This in turn would mean that the British travellers could be saddled with increased costs. It is also likely that, with the British exit, consumers would need to cover any additional health insurance costs, as the UK can and will possibly exit the European Health Insurance Card scheme.

Coming down to the present, Brexit now is real. Britain has voted to leave the EU. Among the plethora of questions which flood our minds, the multi-dimensional impact it will have on Britons and other countries and vice-versa is topmost and it needs due consideration. This uncertainty extends to the field of travel and tourism as well.

It is envisaged that the biggest long-term effect will be a financial one. If Brexit is a success then it will make the pound stronger and Britons will be able to enjoy their vacations. If the reverse is true and unemployment levels rise then most Britons would not be able to afford holidays.

On the political front, too, Britons have to come face-to-face with doubt and uncertainty. Scotland is stretching to break-free and Northern Ireland may do likewise, so on the confidence front, consumers are on a low. The status of Britain outside EU will still take two years of time to shape up; however, here are a few potential areas where travellers are likely to be affected post Brexit:

1.         Borderless Travel: If a Brexit leads to a clinical severance from the EU then it is likely that the Schengen arrangement, under which controls for those crossing borders between most of the member states which had been removed, will perhaps end and border checks might be reinstated. It is relevant to note that the official tourist board, “Visit Britain” reported a figure of 36 million visitors during the year 2015. Figures reveal that 67% of the U.K.’s 2015 visitors were from the EU. These tourists could be subject to new customs rules

2.         Higher Airfares: The EU had in place the no-frills airlines concept, which contributed hugely towards reducing airfares. With the exit of Britain, new air agreements need to be drawn up and it remains to be seen whether British Airlines, like easyJet, is are allowed unrestricted movement within EU and EU member nation airlines like Irish Airline Ryanair and German Airlines German Wings are permitted to fly into UK without restrictions.

3.         The value of the pound: As per I investment B banker Goldman Sachs, the decision by Britain to leave the EU could be hard on the P pound and it could go up to the extent of 20%.

4.         Holiday Protection: As per the existing UK law, implemented under the EU directive of 1992, travellers do not lose money or get stranded in the event of a holiday company collapsing. There are full financial protection arrangements for package holidays. It is unlikely that the UK Government would tinker with this provision but it now has they now have the liberty to do so if they it so wishes. It’s however very unlikely that British holidaymakers will now enjoy the unrestricted consumer protection benefit conferred under the new Package Travel Directive by EU, which is expected to be effective from 2018.

What will be the effect of BREXIT on tourism for travellers from India and the rest of the world?

As things stand now and as it is expected to unfold in the near future, travel to both the regions, i.e. Britain and UK, is going to witness upheavals. Here is a bird’s eye view of the likely impact of Brexit’s on tourists planning to travel to Britain from India as well as the rest of the world:

Advantages

Better Exchange Rates

The P pound has suffered some pounding already and, while this might not be good news for Britons, it is music to the ears of travellers from countries in other continents. While the pound may not remain low for a long stretch of time, it would definitely be helpful for travellers and students who wish to undertake travel to Britain.

Easier Visa Norms

As things stand at this moment, it is expected that Brexit is going to affect tourist inflow. There is a possibility of declining European tourists and this might just be helpful for tourists from countries like India, who travel to Britain for leisure or studies in high numbers, to score a short-term visa more easily. This expectation is not based on any logic or evidence but it seems to be the likely fallout of Brexit.

Better Holiday Experience

With lesser number of tourists from other EU countries, Britain will have to offer attractive packages and discounts to tourists from Asia and other continents so as to provide a better holiday experience for people from such countries. It would indeed be nice to be able to get to London Eye without standing in patience-trying queues.

Disadvantages

Restrictions on Combined Europe Travel

Travellers from other countries, including India, will face certain setbacks while planning their combined Euro travel. Visas for EU and UK have always been different but now it is more likely that the ease of access previously experienced will no longer be there. Instead of being equal partners working together, they will now be separate entities, two regions working on their own. In these changed circumstances, visiting UK and the rest of Europe separately will perhaps make better sense.

Likely Higher Taxes

While the cost of the pound will give some relief to travellers, likely restrictions in the free movement of goods between the UK and EU will translate into higher incidence of taxes. Therefore, Brexit will push up the costs of goods with the imposition of taxes and this will ultimately make travel more expensive.

Conclusion

It is early days for Brexit and a lot of things are going to change. For some Brexit supporters, like Sir Rocco Forte, one of the respected names in Britain’s luxury hotel industry, this step is a positive one.

In an article in the Daily Express, he states did he write the article? If not, 'he is quoted as saying' that “If we went alone it would increase our reputation and clout in the world, not reduce it."

However it can be stated without much ado that till the time the two years cool off period is on, a lot of contemplation, consideration and confabulations are going to take place. New agreements are likely to become effective and new arrangements rolled out for travellers.

Brexit’s full dimension is likely to evolve over time. This much is certain that this exit is going to have considerable effect on travellers. Since there is a lot of uncertainty about the total impact of Brexit on travel and tourism, it can be said that travellers and all those related to the tourism industry will have to wait and watch.