market outlook
tepid. Households are saving as they would during an inflationary shock. We’re hoping another year of rising real incomes will create the conditions for a more sustained rise in consumer confidence DQG D JUDGXDO OHW XS LQ FDXWLRXVQHVV b “So, growth should pick up in 2025, but
the full effects of fiscal easing and growing household spending will likely be felt by late summer. That makes for a sluggish recovery in the first half and a stronger pick-up in the second. Having said that, recoveries can come faster than expected. We forecast a slow first half of 2024 and a strong second half, and the opposite came to pass.”
BUSINESS CONFIDENCE HAS WEAKENED
Wages should continue to rise above the rate of inflation in part because the labour market remains relatively tight, although the UK vacancy rate has eased. De explained: “There are some well-
known issues with the Office for National Statistics’ labour market data, especially the unemployment figures collected by the Labour Force Survey. So, we tend to discount those. But other surveys and HM Revenue and Customs data on wage growth still point to quite significant tightness in the labour market. Although vacancies have been falling and unemployment has edged up, wage growth remains quite strong
FIGURE 6:
INTERNATIONAL TOURIST ARRIVALS % change versus 2019
20 40
1%
-100 -80 -60 -40 -20 0
%
-18% -5%
-9% -3%
-28% -59% -5%
-34% -13%
-63% -74% -93% Europe Americas Asia Pacific
Middle East
Africa World Full-year data for 2024 Source: UN Tourism, January 2025 -58% -72% -69% 31%32% 7%
-31% -5%
-11% -1%
-33%
2021 2022 2023 2024
and, despite slowing, should remain well above inflation for the rest of this year.” However, he said: “Business confidence
UN TOURISM data shows
international tourist arrivals in 2024 returned to 2019 levels in Europe (Figure 6). European air traffic reached 96% of 2019’s level (Figure 7)
has weakened over the winter months. The latest edition of our quarterly chief financial officer (CFO) survey, held after the Budget, saw optimism fall to the lowest
FIGURE 7: EUROPEAN AIR TRAFFIC 2024 AND FORECAST TO 2030 2024 as % of 2019 air traffic % 100 96% 93% 90 90% 91% 80 Jan Fe M Aprarb May Jun Jul Au Sepg Oc N Decovt
40 60 80
83% 56% 45%
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Source: Eurocontrol, January 2025
98% 97% 97% 98% 97% 98% 98% 96% %
100 120
100% 92%
2019 and forecast to 2030 as % of 2019 traffic
96% 100% 102% 104 %106 108% 110% %
Travel Weekly Insight Report 2025 9
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