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 officer of The Advantage Travel Partnership, 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.”
