Market overview Confidence returns but incomes lag
T
10 20 30 40 50
0 20.8m23.2m25.1m 27.2m
he UK economic recovery which began in 2013 was confirmed through the course of 2014, with consistent quarterly growth in GDP matched by rising consumer confidence.
The recovery had been a long time
coming but gathered pace despite stagnation in the eurozone. The GfK confidence index used by the Treasury hovered close to positive territory from May 2014 on. Yet the impact on outbound travel demand appeared muted by the failure to feed through into earnings (chart: UK GDP, earnings and Confidence, page 13). That was disappointing after the industry
had cause to celebrate a 6% rise in holiday departures in July and August 2013 and when overseas holidays in the 12 months to August 2014 surpassed 38 million for the first time since 2009. However, demand stumbled enough for peak summer 2014 departures to decline 2% on the previous year and analyst GfK reported average selling prices down, suggesting the 2013 edition of this report was correct to note: “An increase in consumer confidence could be undermined by lack of growth in earnings.” We should not lose sight of the context. Annual holiday numbers fell by more than
The UK outbound market saw sustained growth for the first time in five years. Can it continue? Ian Taylor reports
nine million or 20% between 2008 and 2010 and only began to rise at all in 2013. The industry has seen nothing like it yet remains for the most part in good health – surely the ultimate test of its resilience.
The global economy The conditional nature of the recovery was summarised by Bank of England (BoE) governor Mark Carney in early November when he suggested the UK economy could continue to expand “without being overly troubled by foreign nightmares”. As Carney explained, while “UK economic conditions continue to normalise . . . indicators across much of the advanced and emerging world have been moribund. The spectre of economic stagnation is haunting Europe.” On September 30, the Financial Times
UK HOLIDAY TRIPS ABROAD: 1991-2014
reported “hopes of a sustained boom”. Days later it noted “an extraordinary state of managed depression” in Europe, the US and Japan as financial markets took fright. Concern that the European slowdown could pull down the UK was not the only issue. The FT’s chief economic commentator Martin Wolf decried the US recovery as “feeble” as the US Federal Reserve ended five years of financial stimulus during which it poured $4 trillion into US markets. At the same time, China’s ability to pull
UK HOLIDAY TRIPS ABROAD 1991-2014 trips (millions)
27.8m 32.3m 26.8m29.1m 35m 36.7m38.7m39.9m41.2m42.9m44.2m 45.3m45.4m 45.5m 38.5m 36.4m 36.8m36.2m37.6m 38.1m
the world economy along has diminished. The FT reported in October: “After three decades on steroids, the world’s second- largest economy is being dragged down by industrial overcapacity, ever-rising debt levels and a slump in the property sector.” Brazil, Russia, India and other emerging markets face difficulties of their own, leaving the world looking at “a sustained phase of slower growth” according to the FT.
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* *12 months to August 2014
Figures rounded Source: Office for National Statistics
The UK economy The UK outlook differed from its major trading partner, the eurozone, for three reasons listed by Carney in November: “First,
Travel Weekly Insight Annual Report 2014 | 9
millions
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