Trade faces sharp slowdown in 2008, says leading economist

A leading economist has warned the travel industry faces a sharper slowdown than the overall economy in the next year.

Professor Douglas McWilliams, chief executive of the Centre for Economic and Business Research, told “Travel faces an uncomfortable mix of a slowing economy and rising fuel costs – and fuel is critical.

“If growth slips by 1% of gross domestic product, travel generally slips by 1.2%. UK growth will probably be down 1.5% next year and there will be an impact.”

McWilliams predicted the oil price would remain high for at least two years – it is currently close to $100 a barrel – and in the long term he warned it could rise to $150-$200.

He predicted: “It is going to be quite a tough time – probably tougher on margins than on volume.”

The collapse in parts of the banking sector that has led to the squeeze on credit will take at least a year to unravel, McWilliams added.

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