market outlook Strong demand amid slow economic growth forecast


bond yields [borrowing costs] rise, especially the US government given its fiscal easing plans and growth and inflation expectations which point to higher interest rates. There have been similar movements in European bond markets but the relative rise in yields has been moderated by the weaker prospects for growth and inflation in Europe which imply lower interest rates.” He suggested the January episode


of sharply rising borrowing costs for the UK government “seems more a consequence of this broader market


FIGURE 14: EUROPEAN TRAVEL AUTHORISATION (ETIAS*)


Consumers aware a travel authorisation will be required to visit most of Europe later in 2025


Don’t know 6%


26% Aware


100 % % of UK adults


20 40 60 80


0 Not aware 68% Not aware/don’t know, by age group 85% 78% AWARENESS of the forthcoming EU electronic


travel authorisation system is limited (Figure 14). UK spending on overseas travel


hit almost £50 billion in 2023 (Figure 15). Corporate travel intentions in 2025 appear


mixed (Figure 16), but some reduction over time to


meet sustainability targets seems probable (Figure 17). Destination and price have the biggest impact on


holiday decisions (Figure 18)


adjustment than a judgement on the UK’s overall creditworthiness”.


EXPECT THE DOLLAR TO STRENGTHEN


The exchange rate of the pound against the dollar and the euro could obviously have a significant impact on travel demand, outbound and inbound. De noted expectations that “this will


be a year of strong growth for the US”, explaining: “There were concerns last summer about a potential hard landing. But the outlook has changed since then. The Federal Reserve has started easing monetary policy and the deregulation and tax cuts promised by the new government seem set to deliver a ‘no landing’ scenario. “Most economists forecast growth of


70%


a similar pace to last year, which would make the US the fastest-growing G7 economy in 2025. A strong US economy always results in a strong dollar. So, expect the dollar to appreciate against sterling.” At the same time, he said: “Growth


65% 18-24 25-49 50-64 65+


* European Travel Information and Authorisation System (ETIAS) Source: YouGov, January 2025 Base: 5,510 UK adults


UK SPENDING ON OVERSEAS HOLIDAYS


10 20 30 40 50


0


£ billion FIGURE 15:


£43.4 £34.3 £25.2 £25.3 £27.3 £28.9 £30.5 £36.9 £39.7 £40.2 £49.8 £42.8*


and interest rates, which have a bearing on exchange rates, point to the euro depreciating against sterling and the dollar this year. The US and the UK are likely to grow at a faster pace than the three largest European economies, with significant downside risks to German and French growth forecasts. As a result, the pace of monetary easing is expected to be much slower in the UK and US than in Europe. Markets expect interest rates to fall in the US and UK to about 4% by the end of this year. By contrast, rates are expected to fall in Europe to about 2%. This divergence suggests a weakening euro against the dollar and sterling.” The global economy is expected to


£7.9 n/a


2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024* *12 months to June 2024 Source: ONS


grow at a similar rate to last year. De said: “Activity will be picking up from a low base in Europe, the UK and Japan. So, the developed world will do a little better this year than last, but emerging market growth should remain largely unchanged. “The major oil-exporting economies


in the Middle East will see an acceleration in growth as they unwind some of their


12 Travel Weekly Insight Report 2025


Holiday spending (£bn)


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