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HomeLatest NewsThe weakness of the pound and the British GDP affect tourism and...

The weakness of the pound and the British GDP affect tourism and housing.

Date: April 12, 2024 Time: 20:21:13

The sixth largest economy on the planet is involved in a fierce battle against inflation that has led the Bank of England (BoE) to rapidly raise its reference rates to 5.25%, one percentage point above what it has uploaded the European Central Bank. This greater pressure from financial costs on households and an economy that has not yet taken off -its GDP increased by 0.2% in the second quarter of the year- have reduced the strength that this market has in both the tourism and real estate sectors. . Spanish.

With the exception of the parenthesis caused by the Covid pandemic, the United Kingdom has been the main source of tourists to Spain for years and the first foreign buyer of homes on national soil. However, the poor macroeconomic performance that its economy has registered in recent quarters (accentuated by Brexit), as well as the strong rise in money and the defility of the pound sterling have been a notable determinant for British tourism. Even more so in a period of rising hotel prices in Spain, as confirmed on Wednesday by the Tourist Hotel Situation survey published by the National Institute of Statistics (INE).

The agency also recently found that, in terms of arrivals, travelers from the islands were still 6% below pre-pandemic levels in the first half of this year. The problem is that in a context as complex as the current one, other competing destinations such as Spain, as pointed out by CaixaBank Research.

Regarding the sale of homes, in the first quarter the weight of the British over the total number of foreigners who purchased a property in Spain stood at 9.48%, compared to 12.03% in the same quarter. period of the previous year. or 13.79% prior to the outbreak of the coronavirus, according to the latest figures available to the College of Registrars. The increase in the presence of other nationalities has offset this movement. Looking back, before Brexit the percentage of British out of the total number of international buyers exceeded 20%.

The dilemma facing the Bank of England

Although with some delay there are signs that the BoE’s monetary policy is starting to work – given that there has already been a slowdown in real estate transactions, the drop in employment at the fastest rate since the 2009 crisis and discounts on consumer goods wages and rising prices in the British services sector show no signs of easing, but rather are already pointing to an upward spiral. Thus, looking ahead to the coming months, John Butler, Wellington Management’s macroeconomic strategist, believes that it is difficult to justify a pause or rate cuts when wage growth remains high and unemployment low.

In any case, the governor of the British central bank, Andrew Bailey, will face a dilemma similar to that faced by the ECB or the US Federal Reserve, since indicators such as the PMI (purchasing managers’ indexes) have contracted again in August and point to an “inevitable” contraction of its economy, according to Chris Williamson, chief economist at S&P Global Market Intelligence. The expert recalls how the increasingly severe recession in manufacturing is coupled with a further weakening of the service sector. It is one more example of a fear of stagflation (high inflation and economic stagnation) that has once again permeated international markets.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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