Cost of living is catching up with holiday plans
City comment: Homeowners remortgaging at starkly higher rates might be rethinking their trips to the Med.
Travel is one sector that has climbed very steeply since being cleared for take-off from Covid restrictions just over a year ago. (Peter Byrne/PA)
/ PA Archiveravel is one sector that has climbed very steeply since being cleared for take-off from Covid restrictions just over a year ago.
That makes sense. Millions of Britons were deprived of one of the great pleasures of life — escaping these grey and rainy islands for a holiday abroad — and were determined to make up for lost time.
So it is worthy of note that, as Heathrow reports today, the ascent appears to have levelled off at just below the pre-pandemic cruising altitude. The new normal level of passengers seems to have settled at around 5% below the 2019 benchmark.
Is that a sign of cost of living concerns kicking in? Maybe.
There are other “canary in the mine” indicators around today too. ITV’s clients are reining in their advertising spending, which is expected to be 12% down on last year in the second quarter.
News reaches me also of corporate budgets being cut in other discretionary areas such as PR and marketing.
The chilling effect of interest rate hikes has been slower to kick in than forecast — largely due to the dominance of fixed-rate mortgages — but is now finally reaching frosty levels.
The markets expect rates to peak at 4.75 or even 5% and stay at that level for the rest of this year. The homeowners experiencing the financial kick in the stomach that is remortgaging at starkly higher rates might now be rethinking their planned family trips to the Med.