Outbound sales remain strong, defying weaker economic growth as Brexit talks begin. Ian Taylor reports
Formal Brexit talks began this week amid growing evidence of the UK economy slowing but with no signs of a slowdown in outbound holiday bookings from the Britain.
Figures from industry analyst GfK show season-to-date bookings for summer 2017 in the UK up 5% year on year to the end of May and revenue up 10%.
Bookings in May maintained the momentum, up 4% on May last year following a 3% decline year on year in April due to the Easter holiday, which fell in March last year but April this.
GfK business group director David Hope said: “It’s an especially good performance as May last year was a high base [for the comparison]. We’re seeing just over a 5% increase in average revenue per passenger for the season to date.”
Hope described the figures as “especially good given the challenging Brexit background, the weak pound and heavily publicised growth in British holidays”.
Family bookings continue to drive the market, with summer 2017 numbers up almost 10% in May on last year.
Bookings for winter 2017-18 also bounced back spectacularly in May after falling away in April, with a 10% year-on-year rise in bookings and 14% rise in revenue for the month.
That left season-todate bookings and revenue both up 8% and came after the winter 2016-17 season ended 11% up for passengers and 13% for revenue.
GfK also reported a good start to sales for summer 2018, with bookings up 5% year on year in the opening weeks and revenue up 8%.
Office for National Statistics (ONS) data confirmed the growing market, with outbound holiday departures in the first four months of the year up 2% on 2016.
Yet ONS figures showed total retail sales volumes in May growing at the slowest annual rate (0.9%) for four years, as inflation outpaced average wage growth by 0.6 percentage points – largely driven by the fall in the value of the pound.
The Consumer Price Index inflation rate hit 2.9% in May, up from 2.7% in April and 2.3% in March, and the Bank of England warned inflation is now likely to remain “well above 2%” for the next three years.
Higher inflation means interest rates are likely to rise sooner rather than later, adding to pressure on household spending – although a rate rise could also stimulate a rise in the pound’s value.
The retail sales figures were the latest in a string of disappointing economic data as the UK economy grew more slowly than most of Europe in the first quarter of the year.
Analysts warned retailers have yet to finish passing on higher import prices to consumers, and the Bank of England’s monetary policy committee noted:
“Monetary policy cannot prevent the necessary real adjustment as the UK moves towards new international trading arrangements or the weaker real income growth likely to accompany that adjustment over the next few years.”
Inbound holiday arrivals to the UK were up 28% year on year in the three months to the end of April.
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