The UK has voted to exit the European Union. There’s tremendous gnashing of teeth over what this means for the world and those are very real concerns. There are also concerns within the travel industry, and amongst travelers.
There were tremendous misconceptions behind the arguments being made over this decision. The UK, of course, was never a part of the Schengen zone and didn’t have the borderless migration that even the EU itself seems to be moving away from. There are millions of EU citizens living in the UK, but leaving the EU doesn’t mean that British immigration policy will necessarily reject these people. Although it does likely make European migration to Britain more difficult in the future.
I’m personally disappointed in the results — that for all the validity in arguments against the over-regulation of the EU, it seems this is a vote for nationalism and against trade and migration. But nothing has actually changed today, other than an announcement of results and the pending resignation of Britain’s Prime Minister.
While there was much campaigning in favor of British self-determination and against Brussels, as well as against immigration, it’s not yet clear how (or that) UK policy will differ from the status quo going forward.
- It’s not a binding vote, the UK Parliament must invoke Article 50 of the EU treaty and that will take at least a couple of years once invoked that won’t itself happen right away. There will be negotiations and formulation of policy during that time (assuming that Parliament follows the directive of the referendum once David Cameron is replaced, which seems likely at this point).
- We also don’t yet know what it will be replaced by. The UK could leave the EU, while remaining a part of the European Economic Area. I’m not predicting this, because it would mean accepting migrants and free trade within the zone and that’s contrary to the political forces which favored Brexit. And because it would involve a willingness on the side of the EU to negotiate this quickly as well. But ‘leaving the EU’ doesn’t tell us very much itself about what policy looks like after.
- Scotland voted against leaving the UK two years ago, but voted in favor of remaining in the EU. Could part of the UK itself secede in favor of joining Europe?
The uncertainty and expectation should have some negative consequences for the stock market and the currency. But does that mean we’ll see fantastic travel deals?
The British pound has been declining for a year and isn’t yet back to bottom. The US dollar has already been a relative value for travel to the UK.
Assuming we see tighter immigration restrictions, we’ll see less travel and so less demand for existing accommodations. In the medium term that should reduce hotel costs.
Airplanes are easier to redeploy quickly than hotel rooms are. So we may see a reduction in schedules, especially intra-European schedules. How reduced demand and fewer seats shake out in terms of price is hard to say.
But many changes that follow — predictive markets aside — will happen slowly. Today is no different than yesterday except in terms of expectations. There is a different view of risk today than there was yesterday when it appeared as though the UK would vote by a slim margin to stay in the EU.