Abta has argued the chancellor’s spring statement reflects an economy that is “not as strong as many would like”, with the Advantage Travel Partnership fearing a potential blow to consumer confidence.
Rachel Reeves unveiled cuts to welfare and other public spending in a bid to stick to the fiscal rules she set out in October.
She added that the Office for Budget Responsibility (OBR) had halved its growth forecast for 2025, with the projection falling from the 2% figure suggested in October to 1% today.
More: Abta urges CMA not to ‘do anything daft’ on holiday pricing
Luke Petherbridge, director of public affairs at Abta, said: “The Chancellor of the Exchequer made no new announcements directly affecting travel.
“However, the statement was indicative of an economy that’s not as strong as many would like, with growth forecasts for this year halved.
“Abta’s research shows that people are willing to ring-fence spending on holidays as much as they can and cut back on other areas first.
“In addition, our data on the value of travel to the UK economy indicates that growth in travel continues to outpace the general economy.
“It’s important the government avoids future policy decisions that restrict the sector and looks at ways it can support businesses to grow, including, for example, by exploring a youth mobility agreement with the EU and progressing with reform of business rates to promote high street businesses.”
The Department for Work and Pensions has estimated that as a result of the cuts to welfare benefits, by 2029/30 there will be 3.2 million families who will lose out financially – with an average loss of £1,720 per year once inflation is taken into account.
Reeves said the measures in her statement would transform an anticipated £4.1bn hole in the public finances into a £9.9bn surplus within five years. This would fully restore the headroom against her fiscal rules, she added.
She said global uncertainty and rising borrowing costs were the reasons for the measures she set out.
Julia Lo Bue-Said, chief executive of Advantage said: “I’m concerned that news of the UK’s economic forecast being halved for 2025 could potentially trigger discussions about a downturn, which would impact consumer confidence.
“The last thing our industry sector needs right now is talk of a recession – particularly in the short term – as businesses already face imminent cost increases, and household finances continue to come under additional pressure.”
Not Just Travel founder Steve Witt predicted a rise in last-minute bookings and a focus on all-inclusive holidays this summer “as families in particular look to maximise their budget” in the wake of the spring statement.
He said: “We may not all love the current government, but we do all love our holidays. So, no matter what Rachel Reeves said, we’ll all still be packing our cases very soon.
“What does change is when people book their holiday. We expect to see an increase in last-minute bookings and a focus on all-inclusive this summer.
“As for UK businesses having to downsize their teams, although the threat of job losses can create uncertainty, it can also be an exciting opportunity for those willing to take the leap to entrepreneurship.
“As a company, we’ve helped hundreds of people take control over their futures and their income by creating their own financial security through starting their own businesses.”
Meanwhile, a hike in visa charges, ranging from 5% to 10% from April 9, was condemned as “deeply disappointing” by UKinbound chief executive Joss Croft after they were disclosed alongside passport fee increases in a policy costing document as part of the spring statement.
The increase in visa costs run counter to the government’s “welcome ambition” to increase international visitors to 50 million by 2030, he said.
“Inbound tourism has the potential to help deliver the government’s growth objectives but this decision flies in the face of that,” Croft added.
“Our inbound tourism industry already battles with sky high costs and increasing visa fees further makes the UK even less competitive for international visitors.
“We have already seen costs for ETAs [Electronic Travel Authorisations] increase by 60% and this is the third rise in visa costs in 18 months.
“We urge the government to review all UK tourism costs and taxes as part of its planned tourism strategy and to focus on removing this competitive disadvantage that holds back growing international visitor numbers and stifles economic growth across the whole of the United Kingdom.”