Currencies – 7/10

Labour, and chancellor Rachel Reeves, have so far succeeded where Liz Truss failed so spectacularly in 2022 when the economy crashed sending interest rates soaring while the pound fell to $1.03 against the dollar. Over the past 12 months, Britons’ spending power abroad has been stable, with £1 being worth €1.18 – identical to election day in 2024. Against the dollar, there is slightly better news, with £1 now worth $1.34 compared with $1.27 then.

Similarly, exchange rates in cheaper destinations like Egypt, Bulgaria and Tunisia have barely moved. One key market for UK travellers is Turkey, where £1 is worth substantially more than it was a year ago – 52.7 lira compared with 41.5 lira. The bad news is that Turkey's high rate of inflation means, according to Tui chief executive Sebastian Ebel, the country is “significantly more expensive” this summer.

Spending power and the ‘feel good factor’ – 4/10

Here, there are distinct winners and losers, albeit with some factors outside government control. One is interest rates, cut three times by the Bank of England since 4 July 2024. The fall from 5.25% to 4.25% has put a little more cash in homeowner’s pockets, with two more cuts forecast this year. Yes, savers lose out, but still get a decent return compared with 0.5% rates three years ago.

Energy bills remain high, and Labour’s decision to remove the winter fuel allowance is believed to have affected up to seven million pensioners last winter, according to the Resolution Foundation. Some, with means, would put the allowance towards a holiday to escape the cold, according to anecdotal evidence from agents TTG spoke to last year, so the recent U-turn is welcome. However, payments will be recouped from individual pensioners earning more than £30,000.

Food price inflation, which peaked in 2023 at 19%, is now around 3%, but weekly bills remain high. The Food Foundation says a typical weekly shop costs around 28% more than it did in 2022, a big factor in determining disposable income for holiday purchases.

Helping the high street – 5/10

In 2023, Labour set out a five-point plan to revitalise the high street. Most relevant to agents was the pledge to lower business rates for shopkeepers, paid for by a tax on online giants. This will be detailed in this autumn’s Budget. Meanwhile, business rate relief, which was 75% during Covid, has fallen to 40%, while a manifesto pledge to put £700 million behind a voucher scheme for SMEs to make premises more energy-efficient appears to have been ditched while the government balances the books.

National Insurance and minimum wage – 5/10

Consumers welcomed the Budget decision to raise funds via NI increases rather than income tax, but business owners didn’t. Nearly three-quarters (74%) of respondents to a Scottish Passenger Agents’ Association said previous NI increases affected profitability, with 8% stating they reduced staffing “as a direct result”. Big increases in minimum wages, introduced in April, are an added burden, but are generally seen as a good thing for a typically low-paid industry. The government also said it will keep corporation tax at 25% “for the entire parliament” and will only lower it if UK plc needs to remain competitive.

Airport expansion – 7/10

The new government quickly grasped the nettle with airport expansion. It has backed expansion at Heathrow in principle and given the go-ahead to almost double passenger numbers at Luton despite being recommended to refuse permission on environmental grounds. More flights at London City airport were also approved. Transport secretary Heidi Alexander has also indicated she is "minded to approve” Gatwick’s bid to bring its stand-by runway into regular use subject to assurances about noise and public transport, due in the autumn. The decisions seem at odds with climate change concerns, but strictly speaking, are good for the industry – even if only to help avoid excess emissions as aircraft wait to depart and land.

Alternative fuels and airspace redesign – 6/10

The Sustainable Aviation Fuel (SAF) mandate, introduced in December, requires airlines to use 2% SAF this year rising to 10% by 2030 and 22% by 2040. Legislation to underwrite the price of fuel and encourage SAF production will be “in place by the end of 2026 at the very latest”, according to the transport secretary, but some have criticised a lack of government investment in UK SAF refineries. The government has just said support for the Advanced Fuels Fund, to encourage refinery building, will continue until 2029. Meanwhile, work is under way to redesign and enlarge Britain’s congested airways in the first shake-up for 70 years, with results due by 2030. Modernisation will alleviate delays, fuel wastage and emissions.

Air Passenger Duty – 7/10

Opponents would argue APD should be abolished, but this is fantasy given its approximately £4 billion annual contribution to the Treasury's coffers. The average holidaymaker flying to Europe will pay £15 APD from April 2026, a rise of £2 – not enough to trouble most consumers. Long-haul rates will rise by £12 for most passengers, but private jet rates will almost double, with the top rate becoming £1,141. The government said increases were because APD rate rises had “fallen behind inflation in recent years”.

Package travel reform – 6/10

Following Brexit, the UK retained the PTRs, its version of the EU Package Travel Directive. A three-month consultation on amending the PTRs – the first changes since 2018 – ended on 30 June. Proposals include amending bonding requirements and scrapping or modifying linked travel arrangements. Another idea is to exempt domestic packages, as these are generally covered by consumer protection laws. Action to limit the time taken by suppliers to refund organisers when compensation is paid by the operator is also being discussed, with a 14-day limit proposed. The ideas have so far received a lukewarm response from the industry, with many regarding them as too timid.

Changes to EU261 flight compensation – tbc

Before the election, the Department for Transport spoke of a “rare consensus” in the industry about the need to reform EU261 flight delay compensation rules. EU261 is loathed by airlines because compensation is often greater than ticket prices. In June, the European Commission proposed extending the current three-hour delay point to four hours for flights of under about five hours' duration, and from four to six hours' delay for longer routes. The UK has yet to say if it will follow, but it looks likely.

Posted working – 8/10

Industry lobbying meant the issue of posted workers was firmly on the agenda at the UK-EU summit in May. Post-Brexit, UK businesses cannot deploy seasonal workers like reps and chalet hosts in the EU while retaining them on UK payroll. However, following the summit, the government said: “We have agreed we will work towards a youth experience scheme.” Parliament’s business and trade committee said the scheme should be for only one year “with a limited number of participants” and be “visa-based”, so it is unlikely to be as flexible as before but is heading in the right direction.

Dealing with Donald – 6/10

Keir Starmer’s tactic of flattering US president Donald Trump with an invitation for a state visit appears to have mostly paid off and maintained good relations between the UK and US, with the UK first in line to get a limited trade deal with the US. Trump has not slapped travel restrictions on any groups of UK citizens, but there are growing signs social media profiling is now playing a part in granting Esta visa waivers, so more diplomacy may yet be needed.