As Labour’s first year in government draws to a close, the UK travel industry finds itself navigating mixed signals, with promising policy moves butting up against mounting fiscal pressures that threaten recovery.

The new government inherited the same economic headwinds that plagued its predecessor. Consumer confidence remains fragile as inflation continues to impact family spending on holidays and travel. This economic fragility has created a challenging backdrop for an industry with the devastation of the pandemic still very much front of mind.

The October Budget delivered a significant blow through increased employer National Insurance contributions. For travel businesses already operating on tight margins, these additional costs – estimated to raise £25 billion annually – place further pressure on employment decisions and investment capacity.

Fortunately, many of our members indicated that while this would deliver a further financial burden, it wouldn’t deter them from continuing to invest and grow. However, the Employment Rights Bill is expected to add another layer of complexity for businesses, with extensive workplace reforms requiring careful implementation.

In a welcome shift from recent policy uncertainty, Labour has demonstrated clear support for aviation infrastructure. The government’s backing for Heathrow’s third runway represents a significant commitment to maintaining the UK’s status as a global aviation hub. Approval for increased annual passenger capacity at London City, Stansted and Luton airports also signals broader government support for strategic aviation growth.

However, these expansions remain future benefits, and travellers cannot yet benefit from the additional capacity. Our support of the Heathrow Reimagined campaign demonstrates expansion at any cost simply doesn’t deliver consumer benefit. The government’s latest announcement related to airspace modernisation is, however, much welcomed by the aviation industry and long overdue.

More immediately impactful has been progress on reducing practical travel barriers. Portugal’s decision to open the e-gates at Faro airport to British citizens represents a tangible improvement for UK holidaymakers, building on existing arrangements at Spanish airports.

While some e-gates are already operational, broader UK-EU agreements on e-gate access promise to end the "dreaded queues at border control" that have plagued British travellers since Brexit.

All change: how and why travel to Europe is poised for a reset

While comprehensive Brexit renegotiation remains off the table, the government has been pragmatic and shown willingness to improve practical travel arrangements. Progress on youth mobility suggests a more constructive approach to EU relations, although package travel, airline insolvency and Atol reforms remain frustratingly stalled.

The establishment of working groups under the new government has been welcomed as we continue to play our part in these forums alongside other industry stakeholders, although their effectiveness remains to be fully tested for the UK outbound travel sector.

Perhaps most critically, Labour must better recognise the economic contribution of UK outbound travel. The industry supports hundreds of thousands of jobs and generates substantial economic value through employment, corporate travel and supply chain effects, but there needs to be a much louder rallying call for government to align its growth agenda with support for a sector that punches above its weight economically.

Our efforts through the UK Outbound Travel Group, our MP engagement programme and political affairs work is an important part of efforts to educate and amplify the industry voice, but if we are to be truly successful, we need more support for the sector from the rest of the trade.

As Labour completes its first year, the industry sees both opportunity and concern. Infrastructure commitments and practical improvements offer hope – but mounting tax pressures and regulatory complexity threaten to constrain the very growth the government seeks to achieve.

Julia Lo Bue-Said is chief executive of the Advantage Travel Partnership.