Abta Travel Finance Conference: Ian Taylor reports Continued from page 56
leads to hesitancy in booking. Further attacks on oil and
energy infrastructure and closure of the Strait of Hormuz could only hike energy prices – gas costs almost doubled on Monday – meaning higher energy and food bills. Iata had forecast an average
oil price of $62 a barrel this year. Qatar’s energy minister was forecasting oil would hit $150 at the weekend, warning the war could “bring down the economies of the world”. Saudi Arabia, the UAE, Iraq, Kuwait and Iran have all cut output or shut oilfields entirely. Then there are the restrictions
on airspace, which are unlikely to be fully lifted, making direct flights to Asia and beyond longer and more expensive. There are mitigating factors:
the US is the world’s biggest oil producer, the Strait of Hormuz sees 20% of global oil traffic when at one time it saw 60%, and reserves around the world could be released. But the UK, EU and Asian economies are forecast to be worst hit by price rises. Cuts in interest rates suddenly
appear less likely, as does a repeat of the kind of energy bill subsidies which mitigated the impacts of the Ukraine war. The effects on travel
businesses are already apparent, with Wizz Air issuing a profit warning last week. Deloitte chief economist Ian
Stewart noted on Monday that after Russia invaded Ukraine in February 2022 oil prices only reached a peak in June. The key questions will be
the length of the war and the scale of disruption to energy supplies. We will only know the answers with hindsight.
‘War poses threat to UK economy and confidence’
The war in the Gulf threatens to reignite inflation and put renewed pressure on UK household finances, a leading economist warned attendees at the Abta Travel Finance Conference last week. Moustafa Ali, senior economist
at consultancy KPMG, told the conference in London: “There is a lot of uncertainty.” He noted the economic signs
were “quite positive” ahead of the US and Israel launching the war on Iran on February 28, with “a pick-up in all sectors of the UK economy – in consumer spending, in the services sector and in manufacturing”. Inflation had peaked, he said, and
was expected to return to the Bank of England’s 2% target level by June, allowing the Bank to cut the baseline interest rate to 3% by the end of this year. However, all
economic forecasts had been thrown up in the air by the war.
Finance directors stress focus is on clients not forecasts
Finance directors at leading travel companies said businesses were wholly focused on assisting customers affected by the war on Iran and it was too soon to assess the impact. Barrhead Travel finance
director Stuart Taylor noted “there have been issues like this in the past – every year there
54 12 MARCH 2026 Bank of England Ali noted the oil price was rising
by the day and said: “The scope of the conflict is unknown.” He warned Iran’s threat to close
the Strait of Hormuz giving access to the Gulf was “a particular risk”, saying: “We could see inflation rebound in the second half of this year if we see an intensification [of the war].” He said reasons for the
“quite positive” pre-war outlook included a forecast of “modest economic growth”, in addition to “quite strong pay growth [and] a sustained
is something”, and the priority was “contacting customers and keeping them informed”. He added: “The finance team is there to support, but first and foremost it’s about supporting customers.” The company would “need
to see how bookings are coming through and what cancellations” there are before making a revised forecast and “tracking against that”, he said, adding: “You need confidence that your starting point is correct.” However, he insisted: “Forecasting comes second.” On the Beach finance director Aisha Anwar insisted the processes
pick-up in household spending from the second half of this year”. However, he said the war added
“an element of uncertainty” and threatened the inflation forecast, warning: “The scale of attacks on energy infrastructure in the Gulf states could have severe consequences on inflation and on consumer spending.” Ali added: “If inflation becomes sticky, and it may, the Bank of England may not cut interest rates as expected. There is a definitely a risk [of that].” He said if the Bank proceeded as
expected before the war and cut rates to 3%, it would not cut rates “any further”, saying: “We expect rates to settle at 3%, significantly higher than their level post-2010.” Ali also warned the unpopularity of the UK government and prime minister Keir Starmer could affect the economic outlook and consumer spending, saying: “A shift in the leadership or policy changes on tax and spending would introduce a further element of uncertainty.”
Stuart Taylor
applied during any disruption “are well stress-tested now” and said: “We have a playbook. We figure out who is travelling, who is in resort; we spend a lot of time on the phone.” She agreed it was too early to assess the wider impact.
travelweekly.co.uk
PICTURES: Shutterstock/Mistervlad, ViDl Studio, Peera_stockfoto, Devynee Studio
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