Would a referendum on the EU matter to the travel industry?

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As the general election draws closer, and the Tories begin to worry more about the threat in their heartland created by UKIP, the topic of the EU is becoming more prominent in election campaigning. We have yet to see the Tory manifesto, but it is almost inevitable that when it is published, it will contain a promise to hold a referendum on Britain’s continued membership of the EU.


Interestingly, as I write this, Tony Blair has weighed in to the election campaign, criticising the decision to propose a referendum, and there is some debate amongst the political columnists whether this intervention will help or hinder Labour’s chances.


But does Britain’s membership of the EU have the slightest impact on tourism, either outbound or inbound, and should those of us working in the travel industry have any interest in the debate about a referendum on EU membership?


Whilst there are many aspects about which the EU can be criticised, in my mind, it has probably done more to benefit the tourism industry within Europe than it has done to harm it. When saying that, I would highlight in particular the liberalisation of the aviation industry, which has enabled aviation to grow massively – I think that most people would probably say that on balance this has been a good thing – it has brought the cost of air travel down, and has enabled our industry to grow massively. The EU has also invested heavily in infrastructure projects in a number of tourist destinations, which has certainly made travel within many of the holiday destinations far simpler and convenient. Ignoring for a second the overall financial impacts of the Euro on the economies of Europe, I would imagine that most tourists both from within the Eurozone and from outside have found it much simpler to have a single currency when travelling in most of Europe. Similarly, whilst the UK hasn’t directly benefitted from the Schengen agreement, most European citizens get huge benefits from being able to cross borders within the EU without difficulty.


On the less positive side, one of the objectives of the EU has been to increase wealth across all its member states, and arguably that has resulted in higher prices in many destinations. Businesses also find themselves subject to EU legislation – which ought to provide a consistent regulatory framework, although it does not always appear to do so, adding legal complexity to some of our holiday products – you only have to say TOMS to create a shudder in many travel businesses!


So does our EU membership really matter, and what would happen if the UK decided to leave?


One topic which has so far created little discussion in the popular press on the subject of the referendum is what, in detail, would be the position if the UK decided to leave the EU. There is no real precedent on which we can rely to help answer this question. It is interesting that most of the other members of what could be called Greater Europe – Norway, Iceland, Switzerland and Liechtenstein tend to look to the EU for their legal framework. Whilst they don’t necessarily adopt EU Directives in their entirety, they quite often copy the legislation in very similar terms – indeed the countries in the European Economic Area (EEA) – the above list, other than Switzerland, are obliged to adopt a sizeable part of EU legislation.


Presumably the UK would still want to benefit from an economic relationship with the EU, and as such, would probably want to join the EEA. We would therefore find ourselves being subject to a number of EU laws and regulations without having the same ability as we currently have to negotiate their contents. It has always been interesting to me how many Brits play an active role within the EU processes in Brussels – and I think that is partly our cultural heritage and background. If we have no voice at the political tables in Brussels, where does that leave us when it comes to negotiating legislation?


Whether there would be any other practical differences resulting from a UK referendum vote to leave the EU is more difficult to quantify. The UK has always adopted a bit of a “half pregnant” approach to EU membership. We participate in those areas where we think we can see a benefit, but then find ways of opting out of some of the important aspects. I have long believed that the biggest single benefit that tourism could derive from EU membership – and this applies to both inbound and outbound tourism, would be for the UYK to sign up to the Schengen agreement. This would make it easier and cheaper for inbound tourists from across the world to visit the UK, as well as making it easier for our citizens to travel to other EU destinations. Successive governments have however rejected the idea of joining Schengen, on the grounds that this might compromise our border security.


The concern expressed by the politicians who wish to stay in the EU primarily relates to the economic disruption of withdrawal, coupled with the risk that non EU businesses choose to relocate from the UK in to the main parts of the EU. Both of these issues are difficult to quantify, but from a tourism perspective, you could argue that we have experienced continual economic and political disruption for most of the last 20 years, and this has not had a lasting effect on tourism. If a decision to withdraw from the EU resulted in a further economic crisis, the position might be more compelling – the period after 2007 saw a 15% fall in outbound tourism, with slightly smaller falls in inbound tourist arrivals.


Ironically, therefore, it’s easy to make a case for saying that we needn’t worry too much about whether or not there is a referendum, or what the outcome of that referendum might be. However, the loss of the UK’s voice in Brussels should not be overlooked – we will find ourselves with less influence, and may well still be subject to laws to which we have had no input.


On balance therefore, whilst we may not need to worry about it for a while, I believe that the travel industry should be lobbying the UK to remain in the EU in the event of any referendum.