Restriction by UK government on travel plans to Spain may have a wider impact

  • Jul 28, 2020 BST
  • Team Kalkine
Restriction by UK government on travel plans to Spain may have a wider impact

Summary

  • On 27 July 2020, the UK advised Britishers against undertaking any non-essential travel to Spain including the Balearic and Canary Islands.
  • With rise in Covid-19 infections in Spain, it was removed from the list of countries safe to travel and mandated that people returning home to the UK will have to spend 14 days in quarantine.
  • Apart from the Spanish economy, the UK government's decision will strain the travel and tourism industry in the UK and elsewhere.

The foreign office in the UK has advised Britishers against planning any non-essential travel to mainland Spain including the Balearic and Canary Islands from 27 July 2020.  The decision comes in the wake of recent spike in the coronavirus infections in Spain. Earlier, on 25 July 2020, Britain announced the citizens traveling to Spain will have to undergo a 14-day quarantine period when they return home. With ease on travel restrictions and relaxations in the quarantine rules announced earlier this month, many Britons resumed their travel plans. Within Europe, Spain is considered to be a major tourist destination during peak summer vacation season.

Why British travelers are so important for Spain’s tourism?

Britishers like to escape the summer heat and enjoy their holidays at the beaches and spend significantly more money than the travelers from other countries. In 2019, Spain’s official statistics bureau recorded that among all foreign people visiting the country 22 per cent were Britishers, more than the German and French at 13 per cent each. In terms of expenses as well, Britons outnumber other nationals with almost a fifth of expenditure at approximately €18 billion in comparison to the German and French tourists who spent 13 per cent and 8 per cent of the total, respectively. The Spanish beach resorts, tapas restaurants, and plaza cafes also earn well from the UK visitors.

Given lesser number of deaths and a lower number of people being admitted in hospitals due to Covid-19 infection than the UK in last few days, Spain feels the UK government’s decision will harm the country. The Spanish tourism sector employs around 13 per cent of total workforce and contributes 12 per cent to the Spanish GDP, according to government estimates. The Canary and Balearic Islands hold special attention as they account for a third of the total economic output. Greece and Portugal are other European economies that depend on their tourism sector for a significant share to their country’s GDP.

Tourism-dependent Spanish economy to suffer from the UK government’s decision

Tourism sector is considered to be very important for the Spanish economy which relies considerably on it. The present decision by the UK government comes as a rage for the country as holiday goers from Britain would not choose Spain for their travel plans. The summer holiday season is already approaching an end for many Spanish hotspots, some of which were hoping to revive the tourism sector as British travelers generally spend a lot on their holidays. 

Oxford Economics commented that Spain’s third quarter growth for 2020 will suffer due to increase in cancellations of travel bookings by the Britishers if the quarantine restrictions continue till the summer season comes to an end and the country’s economic recovery will be slower than expected.  While according to other forecasters, in comparison to the other European countries, the Spanish economy was already facing a slowdown before the latest hinderance came about. 

Before the outbreak of the Covid-19 pandemic, despite facing a downturn like many other global economies, Spain reported to be an outperformer compared to the slow-moving nations in the eurozone. The global pandemic has brought the economic activities to a standstill and the country has been hit hard.  The latest GDP numbers, released last week, show that output in Spain fell 16 per cent in the second quarter of 2020. For a slowing economy dependent on tourism where a majority of people work on temporary contracts in the sector; experts predict that there could be increased job cuts in the offing. A severe lockdown to curb the spread of the coronavirus and the government’s lack of fiscal measures have led the country to struggle in these tough times.

Wider impact of the UK government’s decision

Agreeing that the travel and tourism sector will lose on the confidence that it has built recently, many industry insiders believe that in addition to leading the suffering of the Spanish economy, the UK government's decision will strain the travel and tourism industry in the UK and elsewhere. It could be expected that travelers will spend money either in their own country or in other countries which do not come under the strict quarantine rules. Adam Marshall, director general of the British Chambers of Commerce, pointed out that the sudden changes to the quarantine rules will restrain the already weak sector both in the UK and outside.

The effect of the decision was visible on the performance of some of the key stocks in the sector. In London, the share prices plunged across the tourism sector on 27 July 2020 morning trade and eroded hundreds of millions of money off market values. Among the most noteworthy stocks was TUI, which was down almost 15 per cent due to cancellation of holidays to Spain. Other stocks that saw similar fall included easyJet with a drop of 14 per cent and Ryanair that plummeted 9 per cent.

Industry experts feel that the latest restrictions by the UK will hurt the confidence building measures of the tourism sector and holiday goers across Europe besides diminishing Spain’s economic recovery. Tourism as an industry ranks third after manufacturing and financial services in Spain. The major islands that have suffered the most in this summer tourist season with lower number of foreign travelers include Catalonia, Canary, Balearic, and Andalucia. There are several reports that called for taking a region-based approach while putting the travel restrictions to help save the summer season as these islands have recorded lesser cases of infections when compared to the Spanish mainland.

Conclusion

With travelers seen wearing masks and following social distancing measures, among other health advisory during travel, it appeared as if tourist destinations had geared up to revive the sector after the governments in many countries eased travel restrictions. But the UK government’s sudden decision will once again impede the revival of Spain’s tourism-reliant economy. Amid the fears that they would need to cancel their trips to the beaches in Europe, it is likely to be seen if Britons will avoid visit to Greek Islands, the French Riviera and Italian piazzas in addition to Spain. There is a speculation that suggests soon there could be other countries in Europe to face similar restrictions like Spain.

 

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