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Analysts have warned that Brexit could lead to a devaluation of the pound and push up the costs of foreign holidays for Brits.
The Times reported the warning on Thursday after Sterling fell on Wednesday to its lowest level since early 2009 amid concern over the possibility of a leave vote in the June referendum.
The newspaper quoted HSBC analysts that predicted the pound could fall as low as $1.15 if the UK votes to leave the EU.
The value of the pound has fallen 7% against the euro and the dollar this year and if it falls a further 4 cents it will be at levels not seen since 1985, The Times reported.
HSBC was quoted as saying prices would have to rise as the pound falls in value and fuel costs would rise as they are priced in dollars.
“At least some of these costs would have to be passed on to consumers by struggling retailers,” said HSBC. “In the absence of real wage gains, discretionary incomes would fall.
“This would disproportionately hurt demand, with big ticket categories worst affected.”
Although overseas travel would be affected, UK domestic tourism could see a positive impact, according to Rain Newton-Smith, director of economics at the CBI employers group.
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