The Eurozone’s population and institutions may have been surprised by the outcome of the June Brexit referendum, but the economy has barely missed a beat as markets have snapped back after an initial slide, according to the GBTA BTI Outlook–Western Europe report, conducted by the GBTA Foundation, the education and research arm of the Global Business Travel Association (GBTA). Consumers are consuming and businesses are hiring, investing and traveling for now. While spending has been somewhat resilient, measures of near-term investment intensions plunged in the third quarter of this year, suggesting coming weakness.
Brexit’s potential for delaying short-term economic decisions and its long term impact on trade, jobs, immigration and investment will create challenges for business travel across Europe in the years to come. The specific effects on business travel that GBTA foresees include new waves of uncertainty developing following Article 50 being triggered as trade and immigration negotiations begin in earnest, as well as the end of open skies for European air carriers resulting in fewer flights and higher fares. The latter could also lead to reinstituting mobile roaming charges exposing travelers to rising voice and data communication costs.
The free movement of people and money throughout the EU brought many advantages for business travel, according to the report, but in the future, airlines may have to renegotiate routes and gates with both the UK and the EU potentially resulting in fewer flights and higher fares, processing and acceptance of credit cards becomes more complicated and the end of the European Health Insurance Card for UK business travelers could muddle health coverage during trips.
The GBTA report looks at the five largest business travel markets in Europe: Germany, the United Kingdom, France, Italy and Spain that together make up 70 percent of Western Europe’s business travel market, and serve as a strong indicator for the European business travel market more broadly. Western Europe’s business travel spending is projected to increase to $210.7 billion USD in 2016 and top out at $220.6 billion USD in 2017, 6.0 percent and 4.7 percent growth respectively–positive numbers, but slightly lower than predictions in GBTA’s previous forecast.
“While trips and spending have been bounded by slower European and global economic growth, Brexit’s influence has been negligible thus far,” said Catherine McGavock, GBTA’s Regional Vice President–EMEA. “Businesses and business travelers continue to show their resilience and ability to adapt as Europe has faced an array of challenges recently, but business travel remains strong.”
Germany’s economy remains one of the strongest in all of Western Europe fueled by a robust labor market, low interest rates, rock-bottom energy prices and strong demand for exports. GBTA projects Germany to continue to lead the growth in business travel spending from 2015-2017, with a 7.5 percent compound annual growth rate increase, followed by Spain (6.5 percent), the United Kingdom (4.7 percent), France (4.2 percent) and Italy (2.6 percent).