How will the triggering of Article 50 affect your trip?
The Prime Minister has stated that she will definitely trigger article 50 this March. How is this likely to affect travellers?
Article 50 is the instrument that the UK Government will use to officially inform the European Union that the UK will be leaving. Once triggered, the UK has 2 years in which to negotiate a settlement.
2 years is a very short time to negotiate all the issues. Most civil servants and professionals who have studied the issues say it will be impossible to discuss all the issues that we need to in that time period and the chances are that when we actually leave the EU in March 2019 there will be lots of work yet to be done.
Trade, Immigration, Employment rights, Social issues and the Environment are likely to take several more years to be fully resolved.
But how will travel plans over the next few months be affected?
- The pound is likely to fall after the triggering of article 50. This is because of the uncertainty surrounding the future of the currency and the British economy. Business people do not like uncertainty and are likely to delay investment decisions. Foreign investors are less likely to make decisions to invest in the UK and so will not need to purchase pounds. This is likely to cause the pound to fall in value.
However, unlike Brexit on the 23rd of June, which came as a huge shock and was not anticipated, the markets have known about this coming event for ages, and have priced in a lot of the anticipated fall, so we don’t think it will fall very much.
If the pound does fall it will mean that prices of tours and flights are likely to increase.
- Brexit has affected other countries. It is possible that Donald Trump would not have won the US Presidency without Brexit. The UK vote showed that there were a large number of disaffected voters who felt left out and misunderstood by the elites in London and the South of England. This encouraged similarly disaffected Americans, who grasped the opportunity to kick the US political elite where it hurts! The US dollar has risen against many currencies, including the pound, and looks like heading higher still as interest rates may rise in the US, and Trumps policies discourage imports.
- In Europe there are elections in Holland on the 15th of March, and in France in mid May. If the right wing candidates win in both countries, and if Marine Le Pen becomes French President, she has vowed to bring back the Franc and leave the currency union. This would cause a huge uncertainty about the future of the Euro. The Euro would plunge in value, but the chaos is unlikely to cause any long term rise in the pound as the uncertainty will be even worse. Brexit would become a bit of a sideshow, while the Europeans tried to keep the whole European Union on track. Against the non European currencies like the Thai Baht, Australian Dollar and South African Rand, the value of the pound is very unlikely to rise, more likely to fall. If this does happen, it is likely that travel companies and airlines will have to raise their prices.
We recommend that you book your trip and buy your currency now, before Article 50 is triggered, you could save yourself quite a lot of money.