The consequences of the Costa Concordia tragedy remain uncertain, but one impact is clear: the sinking displaced the fragile state of the economy from the headlines – albeit temporarily.

The switch of media focus may be a blessing while the International Monetary Fund taps up Europe’s chancellors for contributions to a $1 trillion bail-out fund, Greece moves toward the next Eurozone flashpoint in March, and France grapples with a credit-rating downgrade.

Latest UK economic indicators appear contradictory. Unemployment rose to almost 2.7 million or 8.4% in the three months to November, fuelled by job losses in the public sector. However, Office for National Statistics (ONS) figures showed a 2.6% rise in the volume of retail sales year on year in December, despite a fall in spending on credit cards.

KPMG’s head of retail told the Financial Times: “Retailers achieved these sales through heavy and prolonged discounting and this has seriously damaged the health of the sector.” That would explain the profits warning at Tesco.

At least inflation appears to be coming down, though it remains at least double the rate of earnings growth. In the medium term, the government now plans seven years of public spending cuts and tax rises.

The Office for Budget Responsibility forecasts that by 2016-17 UK output will be 18% lower than if the growth rates of 1997-2007 had continued. Or to put it another way, it could be 2015-16 before a household at the midpoint of UK income distribution attains the living standards of 2002-03.

Bank of England research on the impact of government austerity on UK households found 48% worse off last year than in 2010, but 69% expect to be worse off this year than last.

So what about travel? An indication of the strength of the January market should be emerging following a sluggish first week of the year. Comparisons with January 2011 ought to be tempered by the fact that the start to last year was particularly strong, when subsequent months were not.

The most up-to-date ONS figures show outbound holiday departures down 1% year on year in the 11 months to November, but a 5% decline in the third quarter of 2011 – July to September. That is quite a fall in a peak summer market that was already well down on the heady days of 2007-08.

The big two have already acted as though this is a sign of what is to come. Thomas Cook has cut capacity for summer 2012 by 8% year on year and Tui Travel has taken out 9%. Both could restore capacity, of course, although Tui must be the more likely to.

The past fortnight has tossed several straws in the wind, suggesting the way things are blowing: Flybe issued a profit warning following a sharp decline in traffic in the run up to Christmas; the Guild of Travel Management Companies (GTMC) reported a quarterly decline in air bookings at the end of 2011 for the first time since 2009; and AirAsia X pulled out of Gatwick.

The Malaysian-based carrier blamed APD and emissions trading yet also pulled out of Paris (no APD) and India (no emissions trading), so we can take it the economy and the price of oil were the major factors on top of the inherent difficulties of operating lowcost long haul.

AirAsia X only moved to Gatwick in October and we may presume founder Tony Fernandes did not take over Queens Park Rangers last August with the intention of withdrawing from the UK. Clearly, the current state of the UK market does not accord with Fernandes’ view last summer.

Those predicting an improvement towards the end of this year may be right, but I wouldn’t bet on it. If this summer ends well on price, with capacity 8%-9% down on 2011 and without a major failure, it won’t have been a bad year – in the sense that it could be so much worse.