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UK announces easing of travel restrictions, what does this mean for the UK economy?


PM Boris Johnson has stated that travel between some foreign countries will be ‘opening up’ on 17 May. This has come despite delays on the vaccine programme as mentioned in previous articles, but with the ongoing decline of COVID-19 in the UK as we still phase-out of lockdown. On Monday it was said by Johnson that ‘we’ll be saying more as soon as we can’, however; ‘we have got to be very, very tough. This leaves consumers, who are already in desperate need of a foreign getaway, in great anticipation as to when they can book holidays for certain and jet off abroad to relax.


This subsequently comes with many benefactors. As people begin to buy foreign holidays in places such as Benidorm which is a hotspot for UK tourist destinations, it is said that this has many positive links to the bettering of workers welfare and ultimately productivity. It has been mentioned that in taking some time to get away and relax for a period of time, the break from the busy day to day work life is welcomed by the labour force and makes labour less likely to take days off work with mental health-related issues, as wellbeing is generally greater after a getaway. As a result, this will increase firms productivity and make long term business goals more realistic.


Following on from this, airlines and terminals will also be pleased to see that there is also a good chance that the 1m social distance restriction will be alleviated on 21st June. This means for airlines that they are able to run more plane services, as more consumers can enter the terminal at any one time, as well as the number of customers on a plane as well. This therefore will boost the sales companies such as Jet 2 and Thomas Cook will receive, as they make more revenue from ticket sales, which will inevitably rise in price as demand rises too, which increase their productivity too, and allow more staff to be employed too. This is a huge boost to the economy, as this will allow the government to be closer to their macroeconomic objective of full employment in the economically active workforce, which therefore boosts UK productivity. As well as this the government will see an increase in tax revenue in the form of income tax, and VAT on the sales of flights as well.


However, according to the all-party parliamentary group, airports were a ‘breeding ground’ for the virus despite the red amber green system, as arrivals were still mingling together. Currently, holidays abroad are banned, however, a traffic light system will be introduced with countries classed as red, amber and green, depending on their current corona-virus situation.


This traffic light system highlights which countries are safest to travel to, and which should be avoided, as shown below.

The group of 60 MPs stated the government should discourage travelling abroad unless vitally important. This is to not undo the vital work and hardships endured since the re-entering of lockdown in January 2021. Although the UK is technically not in a pandemic anymore, there are still huge risks with flying abroad, and monumental health implications if we do not stick to the guidance to stay local unless necessary to travel. For the large proportion of the nation, and international provinces not yet immunized, this is a huge risk and could push case numbers up and cause us to revert back to square one.

Flight participants travelling to countries classed as green will not need to isolate on their return but will need to take a covid test. Arrivals from amber countries will have to isolate on return, while red countries will have the harshest restrictions.


Many European countries like France, Greece and Cyprus are getting ready to welcome tourists as restrictions ease into their countries also. Whilst this is a positive for global economics, locally this can have harmful effects on the UK, as we expect to see surges in foreign imports as we seek to go on foreign holidays. Thomas Cook states that many popular European destinations will be open to UK holidaymakers very soon. Alan French stated that Thomas Cook has been seeing a large number of holidays being booked for big groups since people have been unable to see friends and family for a long time. This, therefore, means (due to the UK's current account deficit) that economic growth will not be as a rebound as previously thought due to the foreign spending on holidays. In terms of the balance of payments, this is a leakage to the circular flow of income as a result will harm the UK economy and allow it to come back to full potential, much to the detestment of opposing parliamentarians…


In overall judgement, there are two clear sides to opening back up to UK travel. In the short term perspective, this will not allow the UK to bounce back as fast from COVID-19 as we previously thought and as a result economic growth will occur gingerly. However, with the positive effects on the UK health and well being which should be at the forefront of the UK’s ambitions for productivity and success, this will be seen as a victory overall, and another step into returning to normality.

 

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Written by Euan Taylor Research compiled by Jonas Theaker


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