Would a Brexit be good or bad for the Cornish tourist industry?
Let’s take a balanced view of both sides of the argument.
The debate over Europe is hogging the headlines every day and either side would have you believe that it’ll be a catastrophe if they lose so what might the impact of the result be for Cornwall?
If you read my last piece you’ll know that I’m a bit of a Europhile having travelled extensively on the Continent and we lived in France for six months so my instinct is that I should be on the stay in side of the debate. I do recognise however that there are plenty of smart experienced politicians whose intellect is without question and Boris Johnson in the out camp and so the issue is certainly open to debate.
From a tourism point of view what are the things that could have an effect?
It’s the economy stupid!
Bill Clinton’s slogan from his successful 1992 campaign against George W Bush is often quoted in the debate and there’s no doubt that the strength of the economy or perhaps more accurately how well off people are feeling is crucial to the tourist industry. This is particularly true in Cornwall where many holidays are second, third or fourth ones (or second third and fourth ones!) and therefore very easy to skip if you’re feeling uncertain about finances.
I’ve seen studies saying that an exit would do great harm to the economy or would be a great boost. Those that seem genuinely neutral tend to agree there would be a downturn in the period after the vote but successful negotiation of trade agreements could see a subsequent boost to GNP. overall i think we have to leave this as neutral with an acceptance that there might be a short term effect from a vote to leave.
The sterling v euro rate is probably the most significant thing to consider from a tourism point of view. A strong pound makes holidays abroad cheaper and listening to your friends going on about the six quid 3 course lunch menu with wine will have Ryanair’s web traffic going through the roof and getting a kicking for 38 each for a family of 5 at an autoroute service station may see more people looking at a drive down the A303 next year!
Conversely a weak pound makes it cheaper for the Europeans to come here with the Germans in particular loving Cornwall on the back of a long running series of prime time Rosamund Pilcher adaptations. (Don’t ask I have no idea how this came about)
Sterling has really suffered already from the uncertainty and this is certain to continue until June. Expect to see it plummet on a vote for exit, possibly even to parity with the euro.
There is an argument that a Brexit would see the whole euro project fall apart and hence sterling would be a safe haven but from an entirely neutral standpoint we have to conclude that an exit would be beneficial to tourism.
Regulation and Harmonisation
By far the most significant change for owners of holiday properties in recent years was the end of the ability to apply losses to other income. At the time the reason given for this was that that a Euro judgement said that the rules must be applied equally across Europe so losses from Spanish villas and French Gites would also get you a PAYE refund. The government’s response was to ban the allowance for everyone.
If an exit from Europe was to mean that this allowance were to be reinstated then all holiday home owners should be campaigning hard for that side however I suspect that the chances of the Chancellor reinstating a significant benefit to second home owners are about the same as Chelsea winning the league or me being recruited by The Chippendales.
A more sensible argument however is that a vote to stay in would result in further regulation being imposed on businesses. I had a long chat with somebody running a French holiday agency last year who was explaining that my business would be totally illegal in France- I would have to be a qualified surveyor or done 2 years in house training with an estate agent before I could even set it up. He is not allowed to hold cash above a low limit that belongs to owners which means he has to pass balance payments on before the holiday has taken place and we might think 11% employer national insurance rate is too much, in France it is 100%. Yes you read that right if you pay someone £20k then you have to pay £20k a year tax for creating that job.
It does seem beyond our wildest imagination that something so bad for job creation, entrepreneurship and prosperity could happen but it is right there only 26 miles away across the channel.
We must all make our own minds up and it’s clear that an exit would be very disruptive but the jury is definitely out on what it would do for our industry.