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UK HOUSEHOLDS SET TO SPEND £63.4 BILLION ON INTERNATIONAL TRAVEL BY 2025

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UK HOUSEHOLDS SET TO SPEND £63.4 BILLION ON INTERNATIONAL TRAVEL BY 2025
  • UK is predicted to become the second highest spenders in Europe, and the fourth globally
  • Average UK household spend on international travel to reach £9,300 annually by 2025
  • Growth in spend by over 65s predicted to be a key driver

A new study commissioned by Visa forecasts significant growth in international travel by UK households in the next decade. UK spend on global travel is predicted to reach £63.4 billion in 2025, up 58% on 2015. On average, each UK household is set to spend £9,300 annually by 2025, up from £6,500 in 2015.

The study, conducted with Oxford Economics, looked at current travel patterns of Visa-branded cardholders across the globe combined with industry estimates and forecasts for travel.  According to the study, the UK will rank as the 2nd highest spenders on foreign travel in Europe by 2025, just slightly behind Germany, and the 4th globally.

Spend by older travellers is forecast to drive overall growth in the UK over the next decade. The number of outbound trips taken by over 65 year olds is set to grow at 6.5% annually between 2015 and 2025, compared with 3.8% for 35 – 64 year olds, and 1.3% for under 34 year olds.

Globally, estimated cross-border travel around the globe will rise dramatically to £979.9 billion in 2025. Roughly 282 million households will plan at least one international trip per year by 2025, up nearly 35% from 2015. By 2025, China is predicted to have the highest level of household spending in 2025, reaching £167.1 billion.

Travel spend amongst households with annual earning over £13,000 ranked by projected 2025 spend.

Rank Country 2025 Increase over 2015
1 China £167.1 billion 86%
2 United States of America £87.7 billion 33%
3 Germany £63.9 billion 31%
4 United Kingdom £63.4 billion 58%
5 Russian Federation £32.2 billion 118%
6 Hong Kong, China £31.0 billion 78%
7 Singapore £29.4 billion 99%
8 France £28.7 billion 17%
9 Brazil £24.7 billion 106%
10 South Korea £22.5 billion 63%

The study identified key drivers expected to impact global travel over the next decade, including a growing middle class globally, greater Internet connectivity and improved transportation infrastructure across many countries, and an aging global population with more time for leisure travel.

Kevin Jenkins, Managing Director UK & Ireland, Visa Europe, commented:

“Britons’ love of travelling shows no signs of abating. In the next decade we’ll see an expanding travelling class that will spend a growing portion of their household income on international travel.

“More foreign trips mean more decisions to make on spending money overseas. Using a card at home is a familiar daily ritual and more people begin to realise, through experience, that card payments and ATM withdrawals abroad are not only convenient, but easily available and safe. Wherever the foreign destination, paying can remain just as familiar.”

 Highlights of the global report include:

  • The Rise of a New Global Traveling Class: Growing income levels around the world are creating a new “travelling class”. The study uncovered that worldwide, households that make at least £13,000 per year account for more than 90% of spending on international travel today. By 2025 it is estimated that nearly half of all global households (945 million) will be within this income range, spurring greater international travel and spending, particularly by households from emerging markets such as China, Russia, and Brazil. 
  • Global Aging: By 2025, travelers aged 65+ will more than double their international travel to an estimated 180 million trips, accounting for one-in-eight international trips globally. The study estimates that older travelers will be able to afford longer trips that provide greater comfort at higher prices. Trends such as “medical tourism,” whereby aging populations undertake international travel for medical purposes, will also take hold in the future.
  • Increasing Connectivity: The combined forces of globalisation and technology are expanding access. Construction of more than 340 new airports is expected over the next decade, creating new routes and destinations that will make international travel easier and more convenient. At the same time, awareness of travel options is spreading with the rapid uptake in Internet access and the number of mobile devices around the world. Digital connectivity is not only fostering greater spontaneity in travel, but also spurring a broader array of personalised travel and tourism options as well.

An executive summary along with country and region-specific data can be found on www.visa.com/travelinsights.

Finance

Sunak warns of bill to be paid to tackle Britain’s ‘exposed’ finances – FT

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Sunak warns of bill to be paid to tackle Britain's 'exposed' finances - FT 1

(Reuters) – British finance minister Rishi Sunak will use the budget next week to level with the public over the “enormous strains” in the country’s finances, warning that a bill will have to be paid after further coronavirus support, according to an interview with the Financial Times.

Sunak told the newspaper there was an immediate need to spend more to protect jobs as the UK emerged from COVID-19, but warned that Britain’s finances were now “exposed.”

UK exposure to a rise of one percentage point across all interest rates was 25 billion pounds ($34.83 billion) a year to the government’s cost of servicing its debt, Sunak told FT.

“That (is) why I talk about leveling with people about the public finances (challenges) and our plans to address them,” he said.

The government has already spent more than 280 billion pounds in coronavirus relief and tax cuts this year, and his March 3 budget will likely include a new round of spending to prop up the economy during what he hopes will be the last phase of lockdown.

He is also expected to announce a new mortgage scheme targeted at people with small deposits, the UK’s Treasury announced late on Friday.

Additionally, the government will also announce a new 100 million pound task force to crack-down on COVID-19 fraudsters exploiting government support schemes, it said.

(Reporting by Bhargav Acharya in Bengaluru; Editing by Leslie Adler and Cynthia Osterman)

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Finance

G20 promises no let-up in stimulus, sees tax deal by summer

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G20 promises no let-up in stimulus, sees tax deal by summer 2

By Gavin Jones and Jan Strupczewski

ROME/BRUSSELS (Reuters) – The world’s financial leaders agreed on Friday to maintain expansionary policies to help economies survive the effects of COVID-19, and committed to a more multilateral approach to the twin coronavirus and economic crises.

The Italian presidency of the G20 group of the world’s top economies said the gathering of finance chiefs had pledged to work more closely to accelerate a still fragile and uneven recovery.

“We agreed that any premature withdrawal of fiscal and monetary support should be avoided,” Daniele Franco, Italy’s finance minister, told a news conference after the videolinked meeting held by the G20 finance ministers and central bankers.

The United States is readying $1.9 trillion in fiscal stimulus and the European Union has already put together more than 3 trillion euros ($3.63 trillion) to keep its economies through lockdowns.

But despite the large sums, problems with the global rollout of vaccines and the emergence of new coronavirus variants mean the future path of the recovery remains uncertain.

The G20 is “committed to scaling up international coordination to tackle current global challenges by adopting a stronger multilateral approach and focusing on a set of core priorities,” the Italian presidency said in a statement.

The meeting was the first since Joe Biden – who pledged to rebuild U.S. cooperation in international bodies – U.S. president, and significant progress appeared to have been made on the thorny issue of taxation of multinational companies, particularly web giants like Google, Amazon and Facebook.

U.S. Treasury Secretary Janet Yellen told the G20 Washington had dropped the Trump administration’s proposal to let some companies opt out of new global digital tax rules, raising hopes for an agreement by summer.

“GIANT STEP FORWARD”

The move was hailed as a major breakthrough by Germany’s Finance Minister Olaf Scholz and his French counterpart Bruno Le Maire.

Scholz said Yellen told the G20 officials that Washington also planned to reform U.S. minimum tax regulations in line with an OECD proposal for a global effective minimum tax.

“This is a giant step forward,” Scholz said.

Italy’s Franco said the new U.S. stance should pave the way to an overarching deal on taxation of multinationals at a G20 meeting of finance chiefs in Venice in July.

The G20 also discussed how to help the world’s poorest countries, whose economies are being disproportionately hit by the crisis.

On this front there was broad support for boosting the capital of the International Monetary Fund to help it provide more loans, but no concrete numbers were proposed.

To give itself more firepower, the Fund proposed last year to increase its war chest by $500 billion in the IMF’s own currency called the Special Drawing Rights (SDR), but the idea was blocked by Trump.

“There was no discussion on specific amounts of SDRs,” Franco said, adding that the issue would be looked at again on the basis of a proposal prepared by the IMF for April.

While the IMF sees the U.S. economy returning to pre-crisis levels at the end of this year, it may take Europe until the middle of 2022 to reach that point.

The recovery is fragile elsewhere too. Factory activity in China grew at the slowest pace in five months in January, and in Japan fourth quarter growth slowed from the previous quarter.

Some countries had expressed hopes the G20 may extend a suspension of debt servicing costs for the poorest countries beyond June, but no decision was taken.

The issue will be discussed at the next meeting, Franco said.

(Additional reporting by Andrea Shalal in Washington Michael Nienaber in Berlin and Crispian Balmer in Rome; editing by John Stonestreet)

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Finance

Bank of England’s Haldane says inflation “tiger” is prowling

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Bank of England's Haldane says inflation "tiger" is prowling 3

By Andy Bruce and David Milliken

LONDON (Reuters) – Bank of England Chief Economist Andy Haldane warned on Friday that an inflationary “tiger” had woken up and could prove difficult to tame as the economy recovers from the COVID-19 pandemic, potentially requiring the BoE to take action.

In a clear break from other members of the Monetary Policy Committee (MPC) who are more relaxed about the outlook for consumer prices, Haldane called inflation a “tiger (that) has been stirred by the extraordinary events and policy actions of the past 12 months”.

“People are right to caution about the risks of central banks acting too conservatively by tightening policy prematurely,” Haldane said in a speech published online. “But, for me, the greater risk at present is of central bank complacency allowing the inflationary (big) cat out of the bag.”

Haldane’s comments prompted British government bond prices to fall to their lowest level in almost a year and sterling to rise as he warned that investors may not be adequately positioned for the risk of higher inflation or BoE rates.

“There is a tangible risk inflation proves more difficult to tame, requiring monetary policymakers to act more assertively than is currently priced into financial markets,” Haldane said.

He pointed to the BoE’s latest estimate of slack in Britain’s economy, which was much smaller and likely to be less persistent than after the 2008 financial crisis, leaving less room for the economy to grow before generating price pressures.

Haldane also cited a glut of savings built by businesses and households during the pandemic that could be unleashed in the form of higher spending, as well as the government’s extensive fiscal response to the pandemic and other factors.

Disinflationary forces could return if risks from COVID-19 or other sources proved more persistent than expected, he said.

But in Haldane’s judgement, inflation risked overshooting the BoE’s 2% target for a sustained period – in contrast to its official forecasts published early this month that showed only a very small overshoot in 2022 and early 2023.

Haldane’s comments put him at the most hawkish end among the nine members of the MPC.

Deputy Governor Dave Ramsden on Friday said risks to UK inflation were broadly balanced.

“I see inflation expectations – whatever measure you look at – well anchored,” Ramsden said following a speech given online, echoing comments from fellow deputy governor Ben Broadbent on Wednesday.

(Editing by Larry King and John Stonestreet)

 

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