Tourists’ Brexit nightmare will raise price of Malta holiday by £225

Despite Malta’s ever-growing economy, Brexit will still have a hand in disquieting that stability, both in the form of the tourism industry where Britons will find it increasingly expensive to visit the island, and firms that deal with imports and exports.

Economist and lecturer Stephanie Fabri told MaltaToday that whether or not Britain sets competitive trading tariffs following Brexit, the UK is likely to experience an economic shock that will trigger storms in EU countries, including Malta.

“There are some risks associated with a no-deal Brexit which are likely to affect Malta, like any other EU country, such as the effects it could have on tourism and trade, especially firms that are dependent on importing and exporting goods and services to the UK and the free movement of people. Yet the expansion in economic growth has made Malta increasingly resilient against these risks,” Fabri said.

She added, however, that Malta’s charm needs to be preserved to ensure that risks are mitigated. Malta needs to amp its service product and to continue to be alluring to tourists.

“We need to consistently focus on Malta’s attractiveness and this can be achieved by constantly focusing on remaining competitive, on attracting new sectors and by focusing on continuous diversification of the existing sectors too.”

When it comes to the local tourism industry, the British market is arguably one of the most reliable and important. With the devaluation of the sterling, Britons will find it more expensive to visit the island. But then again, they would find that anywhere else is likewise expensive since the UK would no longer be part of the bloc.

“Goods in the UK for us will become cheaper, but for Britons, the local goods and services will become more expensive,” Fabri explained, adding that the sterling was going through increasing pressures due to the lower demand for the currency following talk of a no-deal Brexit.

With a no-deal Brexit looking more likely with Boris Johnson at the helm of the British government, campaigners warn that the cost of holidays for Brits in popular European destinations could soar.

Amidst the no-deal Brexit rhetoric and the hardline promises to scrap the Irish backdrop, the pound was sent plummeting, with fears that it could reach parity with the euro.

The sterling was, in fact, at a six-month low against the euro and a 27-month low against the dollar in the past weeks.

Johnson has not ruled out using a mechanism known as prorogation to suspend Commons sittings in order to stop MPs from blocking a no-deal Brexit.

A no-deal Brexit, far more possible now than under Theresa May’s leadership, might mean that the combined increase in the cost of flights, hotels, insurance and mobile roaming fees could add £225 per person onto the cost of holidays to popular EU resorts, including perennial favourite, Malta.

A People’s Vote campaign confirmed that this would be the likely outcome, supporting the idea of a second referendum to avoid the ‘worst-case scenario’ prospect of a hard Brexit.

A leaked government document two weeks ago saw MPs seizing on its warning, that a no-deal Brexit could trigger food and medicine shortages and trigger riots in prisons.

“There are two conflicting arguments at the moment among international experts on the impact of a no-deal Brexit. On the one hand, some suggest that a no-deal may lead to lower economic growth and productivity for Britain as the country will be losing economic benefits associated with joining a trading block. On the other hand, there is the argument that if Britain sets its trading tariffs at competitive rates amongst other economic decisions, the slowdown in economic growth may not be prolonged and in the long-term the economy and its productivity could recover,” Fabri said.

Both arguments suggest that the UK economy will be hard hit, at least until some element of stability is retrieved.

“The British economy is likely to experience a negative shock, which means that its people are likely to suffer. The question is for how long,” Fabri said, adding there was very little evidence of the repercussions of countries leaving a trading block, so the Brexit fallout is unprecedented.