Brexit, Shmexit! The Brits Keep on Coming … but for How Long?

UK Economic Slowdown Likely, but 2016 Still Seems Certain to Register Gain for Visit USA Traffic

The “gloom and doom” scenario portrayed as the outlook for the UK economy following the close June 23rd vote of British citizens to withdraw from the European Union—popularly known as “Brexit”—has given way  to a “wait-and-see” attitude among economists and travel and tourism analysts.

Feeding the frenzy of apocalyptic commentary in the immediate aftermath of the vote was a sharp one-day decline of 10 percent in value of the British pound sterling vs. the U.S. dollar. This was of particular significance to the U.S. inbound tourism industry, for whom the UK is the number one overseas source market.

There were steep declines, also, in the market value of publicly trade stocks at the major exchanges in North America and Europe.

But since the first several days after the Brexit vote, there has been a degree of stability on the overall economic landscape in the UK, even if that landscape looms less large. For instance, while the pound did indeed decline 10 percent in value against the dollar by the first five days after the Brexit vote, it has essentially remained at that level since then (see table below). And most markets have bounced back.

Value of British Pound Sterling (£) vs. U.S. Dollar ($)

June 23-July 19, 2016

The Big Picture: Speaking at conference over the past weekend, Andy Haldane, chief economist for the Bank of England, said: “The amount of slack in the UK economy is likely to begin steadily rising in the period ahead, perhaps causing unemployment to rise. The main reason for that likely slowdown is uncertainty.”

He added, “And with uncertainty having risen sharply, caution may once more become the watchword for companies and households, as it has for most of the period since the crisis … Even though the economy is unlikely to crash, it is likely to slow, perhaps materially, in the quarters ahead.”

Markets worldwide await the next meeting of the bank’s Monetary Policy Committee on Aug. 4 to see if it lowers interest rates and/or take other steps to prevent a further slowdown of the nation’s economy.

Meanwhile, they Keep Coming to USA in Greater Numbers: This year, 2016, could yield the largest number of visitors from the UK to the USA since the trough years of 2010-11 in the midst of the Great Economic Recession, which lasted longer for the UK than it did for the U.S. The newest data released by the Office for National Statistics (ONS) seem to suggest a continuation of the strong growth in Visit USA traffic beyond 2015, in which the number of inbound visitors to the United States increased by 18 percent over 2014, according to the U.S. National Travel and Tourism Office (NTTO).

The ONS data reflect traffic to all of North America (meaning the U.S. and Canada), with the U.S. share usually comprising about 85-90 percent of the market. We’ve arranged the key numbers in a 10-year window in order to provide some perspective on the degree to which inbound visitation from the UK has increased.

UK Resident Travel to North America

Full-Year and First Quarter

2007-2016

(000s)