Jason Moore11/07/2016 00:00
TW
1

The Balearics were heading towards a record holiday season and then Britain decided to leave the European Union; the pound tumbles along with British consumer confidence. All of a sudden things do not look as rosy as they once did. Resorts on the island, popular with British tourists, are starting to struggle. British tourists have 10 to 15 per cent less spending power than they did three months ago. If anyone thought that the pullout of the European Union would have little impact in the short term, they were greatly mistaken. Everyone thought that the tourist tax would be the story of the summer not the sudden fall in spending power of British tourists.

The move is obviously a blow to the Balearics which will have to hope that other nationalities can make up the spending shortfall. I suspect that, as a result of the economic uncertainty, the pound will remain weak against the euro, which is a blow to both expats and tourists. If you look back in recent history, you will notice that when sterling is strong the Balearics do very well. In fact, during the Franco years when sterling fell against the peseta, the Spanish would devalue the peseta to ensure that Brits would continue spending.

At a time when British tourists were consolidating themselves as the big spenders the move is a blow. The Balearics must hope that sterling regains some of its lost value sooner rather than later because otherwise it will hit the local economy.