NEWTON FERRERS, England/LONDON: Before last year’s Brexit vote, Scott McCready was struggling to fill his holiday cabins on the coast of southwest England. Now the site is fully booked with British tourists avoiding more expensive foreign trips following a plunge in the pound.
This turnaround in the 10 months since Britons decided to leave the European Union reflects a jump in demand for “staycations”, with British consumers seeking ways to make their money go further as rising inflation squeezes their incomes.
McCready, who gave up a job in IT to build his site between ancient woodlands and a creek in the county of Devon, recalled the hectic days after last June’s referendum.
“My phone just took off,” he told Reuters. “It was like someone flicked a switch. We were booked out for the rest of the summer and now this year we’re having to turn people away.”
The reason why Britons and some Europeans have flocked to his 24 wooden lodges in Newton Ferrers, once a quiet fishing village 370 km (230 miles) from London, is straightforward.
The referendum result caught financial markets off guard, sending the pound down about 20 percent against the dollar and 16 percent against the euro at one point. That rapidly pushed up the cost of holidays to the United States and continental Europe, both popular destinations for Britons.
Since then, sterling has recovered some of its losses but remains down about 14 percent against the dollar and 8 percent against the euro.
So about 15 km away, Chris Duff is enjoying a similar jump in demand at his 90-lodge Thatches park, where he is investing to upgrade facilities which include a swimming pool and a fitness suite. “If we could, we would like to expand,” he said.
Britain’s US$2.6 trillion economy surprised almost all forecasters by withstanding the initial shock of the Brexit vote, a point made by Prime Minister Theresa May on Tuesday when she called a snap June 8 election.
“Despite predictions of immediate financial and economic danger since the referendum we have seen consumer confidence remain high, record numbers of jobs and economic growth that has exceeded all expectations,” she said.
But the picture for the years ahead looks weaker as sterling’s fall raises import costs. With annual inflation pushing up toward 3 percent, outstripping sluggish wage growth, Britons are becoming cautious in their spending – and not just on holidays.
Retail sales rose at the slowest pace in nearly a decade in the first three months of 2017, according to the British Retail Consortium, and surveys have shown that households are increasingly worried about the outlook for the economy.
German supermarket groups Aldi and Lidl, which attracted new British shoppers during the global financial crisis due to their deeply discounted prices, have seen accelerating sales in 2017.
“Customers are voting with their feet,” Matthew Barnes, Aldi’s CEO for Britain and Ireland, told Reuters in February. The squeeze facing many people in Britain is unlikely to…