Industry sources have told the Bulletin that many Britons have been making a number of block bookings on websites which offer the option of last minute cancellation at no cost because they are worried about the cost of living crisis getting worse in the UK.
With rising interest rates likely to put more pressure on household spending, British holidaymakers are turning their back on Spain this summer, and could save £5,000 by visiting Cornwall instead, according to research from Parkdean Resorts.
Google searches for popular Spanish resorts have plummeted, with Malaga down 18% in the last three months, and Mallorca down 18% year-on-year, while searches for Cornwall are up 83% over three months, and 22% year-on-year.
And now, the sector is braced for a wave of cancellations. Britain's economy - which was hit by the shock of Brexit as well as the COVID-19 pandemic and the surge in gas prices caused by Russia's invasion of Ukraine - has dodged a widely expected recession so far in 2023.
But unlike most other big rich economies, output has barely recovered to pre-pandemic levels and growth this year looks set to be a minimal 0.25%, according to the BoE's forecasts.
Bank of England Governor Andrew Bailey said Thursday's rate rise was “absolutely imperative” to control inflation. “We’re not expecting, we’re not desiring a recession, but we will do what is necessary to bring inflation down to target,“ he said.
He said other countries were suffering too from “a pattern of persistent and rather sticky inflation”.
Last week, the European Central Bank raised rates by a quarter-point to 3.5%, and the Swiss and Norwegian central banks announced increases earlier on Thursday. All signalled there might be more tightening to come.
Bundesbank President Joachim Nagel described inflation as a “very greedy beast” on Wednesday, and the U.S. Federal Reserve Chair Jerome Powell said half a percentage point of further rate rises remained “a pretty good guess”, despite last week’s pause.
Bailey reiterated his view - unpopular with many politicians and trade unions - that current wage growth was unsustainable and he said businesses could not continue to keep raising prices at their current pace.
The BoE retained its previous guidance on future policy, saying further tightening in monetary policy would be required if there was evidence of more persistent pressures.
“The BoE has still made no attempt to set the stage for a pause in the rate hike cycle, which we have now seen from the U.S. Fed,“ said Henry Cook, senior economist at Japan’s MUFG.
The BoE said it would keep a close eye on the impact of higher rates on mortgage costs, as well as rising rental costs.
Official figures on Wednesday showed consumer price inflation was unchanged at 8.7% in May - although down from a peak of 11.1% last October - while underlying inflation rose to its highest since 1992.
Last month the central bank forecast that inflation would fall to just over 5% by the end of this year and be below its 2% target in early 2025.
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Ulla JacksonWhile I'm sure you're familiar with stereotypical English insularity and xenophobia, you don't appear to be British, and so you could be forgiven for missing the irony. Hint: I'm Welsh, which makes me and any other Welshman just as bad as all the other foreigners who can't even spell "Majorca" properly, and are clearly responsible for the imaginary decline of tourism and everything else here 😳
Morgan WilliamsAre you having a blip in your mind? You correct one it's called Mallorca not Majorca. Then you "accuse" the next person writing Mallorca as it's not the correct spelling! Do you have difficulty making up your mind how to spell? It's only the British who spell it Majorca. The rest of the world know it's Mallorca.
Charles Dalrymple-ChumleyYeah, but surely they're all foreigners. And well, ahem... you know... But you sound like a foreigner too, since you can't spell Majorca properly. You aren't Welsh are you? They're worse than the krauts and frogs.
Waiting at the airport for a friend on Saturday night I was blown away by the mass droves of people arriving. For the one hour that I was in the Arrivals Hall, it was a constant non-stop stream of tourists. I counted over fifty transfer coaches and the same number of taxis, if not more. Based on this small "research" sample, I would say tourism in Mallorca is thriving.
Only the Welsh. God, you must be fun at parties.
Richard PearsonNo, that's just how certain foreigners choose to spell it. Given your aversion to foreigners, surely you can appreciate how this kind of foreign influence explains why Mallorca is going down the tubes. Any day now. Just wait for it 😳
Shouldn’t that be Majorca ?
For those who who are hoping for it to all come crashing down. I'd invite you to take this little geography lesson: First, get a map of Mallorca. It's easy. Just open Google Maps. Now, find Magaluf. It may take you a while, because it's only a small dot on the Southwest coast. This is where the vast majority of Brits book their holidays in Mallorca. Yes, there's also Port de Pollença and to some extent, Port de Soller, for those that aren't Magaluf types, a few do Alcudia (although those are all quite a mix). There's Cala Bona, which is a relatively pure little fish & chips English dominant harbour next to the enormously larger Cala Millor, which is German dominant. But it's pretty small. Now, do you see that land mass surrounding Magaluf? That's called "Mallorca". It's an island in the Mediterranean. It's over 3600 sq. km, and you might not realise it, but it's actually not just outback wasteland. It has over 1 million tourist beds, available to accommodate tourists. Many are in the resort areas (including the handful of resorts that Brits go to), but there's also a lot of boutique hotels, fincas and villas that are available to rent for holidays. Many, if not most, are 4 and 5 star rated. And by all accounts, they're booked solid this year. The total available beds in the British favoured areas is something around 160k. Considering all of this, if a handful of those Brits can no longer afford holidays abroad (the economic situation in the UK is pretty well known) or because those silly "rules and regulations" make it "boring" in Magaluf, then how much actual perceptible impact on the overall tourism landscape do you think it would have? And if the demand from other demographics is as high as the stats seem to indicate, then wouldn't it be highly likely that any minor loss of British tourism would be quickly made up by the more dominant tourist demographics? For this reason, I have to question the significance of the entire narrative. It actually appears rather defensive.
Its not an outsized increase in the rate, its needed. In my day mortgage rates were 15%. If you took out a 2% loan 2 years ago and think you can't pay the mortgage when rates are at 6% then quite frankly you deserve to have your house reposessed. I would only take a mortgage on if I knew I could repay at 15% rates. Rates have been too low for too long, time for us savers to benefit again.
Have they informed Morgan and Zoltan about this ?