Tourism will be hit as a sterling in free fall will make it more expensive for British tourists to travel out of the country, experts agree.
Given the importance of the British market to Malta’s tourism sector, the industry is likely to be among the first to feel the pinch of Britain’s decision to leave the EU.
The British pound lost up to 10 per cent of its value at one stage throughout the early hours of yesterday. This and the market jitters created by the Brexit result were the primary problems for the time being, according to economist Philip Von Brockdorff.
“Uncertainty could be expected after such a monumental decision but the loss in value of the British pound is dramatic,” he said.
The currency’s downward spiral will make online shopping from the UK cheaper but Maltese pensioners who receive a paycheque from the British government will see their take-home pension drop, Dr Von Brockdorff added.
Uncertainty was unlikely to vanish anytime soon because the UK’s future relationship with the EU has not yet been outlined and exit talks will last two years, he said.
“It is unknown whether they will choose the Norwegian or Swiss model, or opt for an arrangement based on World Trade Organisation rules,” Dr Von Brockdorff said.
The UK will remain closely associated with the EU but it will lose its influence on decision-making in Brussels, according to economist Lino Briguglio. Giving a stark assessment on his Facebook wall, Prof. Briguglio insisted Brexit “was not the end of the world” and the biggest loser was Britain itself.
“Scotland will seek independence and this time it will get it. What will remain of the UK, will hobble on,” Prof. Briguglio said, adding the UK would continue to lose its influence in world politics and economics.
What they said:
David Curmi, CEO of MSV Life
“Initially there will be a huge blow for investors in the financial markets because of volatility, especially in the insurance sector. The long period will then bring prolonged uncertainty, possibly for years, which never bodes well for business. On a positive note, this might open the possibility of UK-based businesses relocating elsewhere to remain in the EU, possibly Malta.”
Tony Zahra , MHRA President
“Undoubtedly this will bring about changes to our tourism industry as 30 per cent of our market is from the UK, mostly in the inclusive tours that account for nearly half-a-billion of spending in the economy. The drop of the British pound could make it costlier for Britons to come to Malta.”
Louis Farrugia – chairman, Farsons Group
“I am obviously disappointed with the result of the EU referendum. The British people have taken a decision based on emotional values rather than rational and economic logic. I hope that over time free movement of trade between the UK and the EU will prevail in the interest of Malta’s economy and the robustness of the single market, which is an important factor in maintaining a competitive EU economy which Malta benefits from.”