Trade warns on interest rate rise

THE travel trade has warned continuing increases in interest rates could hamper the market’s recovery next year.

The Bank of England’s 0.25% rise to 3.75% is believed to be the first of many. With consumer borrowing at record levels, rising interest rates could spell a fall in disposable income.

Advantage president Roger Smith said the initial increase would not have a great effect on the industry, but sales could be hit if it continues to rise. “You may see people taking fewer short breaks, and that is when we will feel the effect,” he said.

Federation of Tour Operator director-general Andy Cooper said it was something it would watch closely.

“People will always take one main holiday a year, but if they have less money, they may take a cheaper break or just take one week instead of a fortnight.”