It is potentially bad news for Malta's tourism industry but good news for tourists planning a shopping trip to the UK, as the British pound last week reached an all-time low against the euro.
Sterling fell to a value of €1.118 last Friday, down from almost €1.30 just two months ago. It has sunk 20 per cent against the euro this year as the British economic situation has worsened, with economists warning that the UK's economy is deteriorating faster than expected and could suffer badly in 2009.
This could have a detrimental impact on the Maltese tourism industry if increasing numbers of British people decide to stay at home or venture outside of the eurozone for holidays next year - and the rate remains unchanged.
The British constitute the vast majority of Malta's tourists - last year they made up 482,404 out of 1.24 million visitors. But many British travel agents are now advising customers to beat the slump by looking at cheaper destinations outside the eurozone, such as Turkey and Bulgaria.
Last December, £500 spending money for a British tourist travelling to the eurozone would be worth approximately €690 on the currency markets. This week, the same value of sterling will give you approximately €559, although the rate at an exchange bureau may mean an even poorer deal.
On Friday, Travelex.co.uk would exchange £500 for €545.15 at a rate of 1.0903, while HSBC would exchange £501.57 for €540 at a rate of 1.076620.
Peter Daly and Mary Daly from Manchester arrived in Malta for a week's holiday last week. Their most recent holiday in the eurozone was to Tenerife 18 months ago, when they received approximately €1.40 for the pound. This time they got €1.11.
Mr Daly said that the unfavourable exchange rate means the couple have to limit their spending to a certain extent while in Malta, and that they are likely to look outside the eurozone for their next holiday destination if the situation persists.
"I think now might be time (for Britain) to join the euro... I was against the idea before because of history and tradition, but now it seems to make more sense," he said.
However, opposition to the euro remains fairly entrenched in the UK. Earlier this month, the government was forced to announce it had no plans to join the euro after the European Commission President Jose Manuel Barroso said that the financial crisis meant that Britain was "closer than ever before" to joining the single currency.
Another British visitor, Colin Purcy, thinks that Malta retains its appeal for a certain type of tourist, despite commission charges meaning he exchanged the equivalent of almost one pound for one euro prior to arrival.
"I would have to check the prices, but I think the pound is falling against most currencies so, although it is no longer cheap for us to eat and drink here, we didn't come here for a cheap holiday... we still wanted to come here for the culture and heritage," he said.
Malta Tourism Authority spokeswoman Catherine Zammit said the MTA was taking measures to limit the impact of the economic slump on the tourism industry.
"Malta is undertaking a very aggressive advertising campaign in the UK, consisting of TV ads, outdoor advertising, and print media coupled with an intensive and ongoing PR campaign."
The MTA is also actively targeting segments that are less adversely affected by the current economic slowdown and working hard to ensure that there is sufficient air seat availability from the UK to Malta, which may be one of the most important determinants that will influence the total of British visitors to Malta, she said.
Paradoxically, the UK is becoming a more attractive place for bargain hunting Maltese to travel for a shopping spree. Retailers on Oxford Street and other London shopping hubs have reported a significant rise in customers from abroad, who have taken advantage of the prevailing exchange rate. Up to 10 million overseas visitors are expected to shop in the West End in the run-up to Christmas.
With high street prices falling, the UK is now better value for a range of luxury festive presents than Germany and France, a survey by lifestyle management company Whiteconcierge found.
However, Maltese shoppers who are thinking of exploiting the changing value of the pound against the euro by shopping online should perhaps steer clear of certain websites.
Giant online discount store - play.com - is stoically ignoring the reality of the financial situation and using a conversion rate of €1.40 to the pound sterling.