Well, the unexpected—and, to many, the unimaginable—has happened. Britain voted in favour of Brexit on June 23, and the long, drawn-out process of withdrawing from the European Union has begun.
While months of opinion polls suggested the final vote would be close, with the forces of Leave often fractionally ahead, few pundits seemed to take those polls seriously and even fewer claimed the seemingly inconceivable would actually happen.
Last week, I made hypothetical suggestions of how Brexit could affect Canadian travellers. Now that Brexit is a reality, let’s take a deeper look at some possible, and some certain, repercussions for Canadians.
Firstly, beyond the effects of currency fluctuation, there’s unlikely to be any noticeable changes for Canadians heading to the U.K. this summer.
For now, the United Kingdom remains a member of the European Union—just to be uber-clear! Though a plurality has voted to leave, Britain has not yet done so and the EU can’t throw Britain out. Until Britain invokes Article 50 of the Lisbon Treaty (“Any member state may decide to withdraw from the union in accordance with its own constitutional requirements”), a hesitant, nervous status quo exists.
No time limit exists on when Britain must invoke Article 50, and in fact as the Brexit referendum isn’t legally binding, the British government could (in theory) just ignore the results. (Though it’s unimaginable to me to ignore “the people” in a legitimate referendum in a democratic state.) Or, individual members of parliament could, en masse, go against the will of the people and block the Brexit motions that are tabled.
Having led the Remain side, Prime Minister David Cameron promptly resigned and has said it will be up to the next government to pull the trigger on Article 50. The earliest that’s likely to happen is September. Once it has been invoked Britain has two years to leave the EU.
For their part, some EU members want Britain out immediately to end the current financial uncertainty, and say they won’t indulge in any talks until Article 50 has been triggered. Of course, there’s no existing way for the EU to force Britain to leave earlier, as the only provision to suspend a member state is if it is deemed to be in breach of the “…basic principles of freedom, democracy, equality and the rule of law.”
But the potential for upheaval remains, so read on.
The value of the pound is down
As many economic experts suggested beforehand, the pound sterling was hammered from the moment the results started to trickle in, right up until midafternoon of the following day. At one point the pound even dropped to its lowest point since 1985, while forecasts for the British economy have gone from “stable” to “negative.” Most economists are unanimous in predicting that the U.K. economy is destined for an unavoidable recession.
But how does that affect Canadian travellers?
As I touched on last week, currency fluctuation has a massive effect on the cost of travel. A lower pound against the Canadian dollar means our currency goes further. However, if Britain suddenly has to pay more for everything from oil to bananas because of that same lower pound, local costs of everything from meals and hotels to train tickets and sandwiches increase. Taken to its extreme, that may not only cancel out any possible benefit to Canadians of a lower pound, but could even result in any trip to the U.K. actually costing more than it would have done just a few weeks ago. My overall advice here is to keep an eye on this one, pay attention to the news and to details, and do the math.
How can travellers avoid British price hikes?
If you’re planning on heading to the U.K. this summer or fall you might want to try prepaying and locking in as many expenses in advance as you can. In many cases that’s not possible, but if you can prepay for accommodations, day tours, train tickets or anything else in full now, consider doing it.
Many tour operators have policies that, once a tour has been paid in full, clients will not be subjected to any surcharge or fee increase that arises later. Conversely, if you’ve only paid a deposit you will often be subjected to the higher rate. In fact, most operators will impose a surcharge or fee increase due to dramatic currency fluctuation (or other issues, such as substantial increases in the cost of oil)—however, if the increase exceeds 10 percent they’ll generally provide you with the option to cancel your arrangements without further penalty.
It’s worthwhile reading the fine print regarding price increases. If a company guarantees any rate once paid in full, consider paying in full now.
Could there be travel disruptions after Brexit?
Many U.K. and European budget airlines fly between Britain and Europe at often astonishingly inexpensive rates. “Open Skies”—the policy that allowed any airline from an EU country to fly anywhere in the EU that they wanted—ensures rabid competition and dramatic drops in airfares for flights within the EU.
Now—or at least in the near future—any British airline wanting to fly to continental Europe and any European airline wanting to fly to Britain no longer has that blanket right. A new Open Skies deal may be negotiated at some point, but for the time being the life expectancy of the current arrangement is limited. This means it’s probable some routes may be cancelled completely, while others will see a substantial increase in price.
Should travellers buy all their pounds now, or just use bank cards in Britain for the next two years?
Not so long ago, most travellers carried a bit of cash, a stack of traveller’s cheques and a few credit cards as back up. Traveller’s cheques do still exist, but it’s more common today to carry little to no cash and use bank cards and ATMs. However, bank cards are not infallible, especially when there’s financial instability.
When the Greek economy went into meltdown last year, everyone—including most travellers—was limited as to how much money they could withdraw from ATMs each day, and often had to queue for hours just for the privilege of taking out as little as a daily maximum of $20. The restrictions were put in place by the government to prevent a run on the banks, but with hotels still demanding instant payment many travellers were put in difficult situations.
There were similar issues for British accountholders in the immediate aftermath of the Brexit vote, when many ATMs around the world—as well as hotels, stores and even restaurants—refused to accept British bank cards because of the massive volatility being experienced by the pound. And with central banks unwilling to set exchange rates for the pound, many British travellers suddenly found it was local cash or nothing!
This didn’t affect Canadian travellers with credit cards or cards from Canadian banks, but it does emphasize my longstanding mantra that no traveller should ever depend solely on plastic during their travels.
No one particularly wants to carry wads of cash while travelling—but no one wants to be caught literally penniless because of a financial or technical meltdown that is totally beyond your control. Always have an emergency fund of local currency in cash on hand to get you through at least a few days. The alternative could well be going hungry, homeless or in some countries even being arrested for not paying a bill.
While the embargo on British banks likely won’t last long, I still recommend buying a few hundred dollars’ worth of pounds cash if heading to the U.K. in the coming weeks—particularly if there’s a chance a similar but reverse issue involving access to foreign banks in the U.K. arises. And, if buying pounds before going, make sure you really shop around for the best exchange rate.
What can travellers expect at the U.K. border?
The main powers of the European Union have stressed that they want Britain out as quickly as possible. But legally it can still be years before that happens.
Anyone travelling to the U.K. within the next few months is unlikely to notice much difference at any airport or border crossings, but you just never know what could happen. Currently, as with most European entry points, the U.K. generally has two queues: “Residents and members of the EU” and “non-EU members.” Canadian passport holders are directed to the second one. At some point, those signs will likely change to “U.K. residents” and “Everyone Else.”
When that happens, the non-U.K. queues will be considerably longer. There’s nothing you can do to avoid this; but if just connecting through the U.K. or heading from the airport directly to a train, allow yourself time for delays at Customs. Changes to any system often initially cause mayhem and confusion, so don’t make your travel plans more stressful by having a too-tight itinerary.
Does Brexit have a silver lining for Canadian travellers?
If you’re heading to the U.K. next week and planning on visiting Stonehenge, enjoying afternoon tea or learning to play the bagpipes, it’s likely you won’t notice any change at all. However, aside from the Canadian dollar possibly going a bit further (or not!), there could be one other benefit.
Although London is one of the planet’s tourism capitals and attracts millions of people from all over the world, as anyone who has ever walked its streets during the summer knows, the majority of visitors seem to come from France, Spain, Italy and elsewhere in Europe.
If new entry requirements or uncertain bureaucracy kick in earlier than expected, some Europeans may choose to take their vacations elsewhere. If enough of them do, U.K. tourism will take a hit. And if that happens there could be bargains for Canadian travellers, especially with accommodations. It’s highly unlikely to happen this summer, but it’s well worth keeping your eye open for bargains from the fall onwards… unless Europeans flock to Britain in even greater numbers to take advantage of a weaker pound, that is!
Can I just change my travel plans to avoid the U.K. altogether?
When there’s a natural disaster, war or even massive labour unrest, airlines often allow you to change or cancel your arrangements with minimal fees or even no penalty. Britain’s Brexit likely won’t arouse such sympathy from airlines for anyone now wishing to avoid the U.K., and it’s unlikely travel insurance companies would either.
However, if London is the starting point of your European travels, you might consider flying via Amsterdam, Frankfurt or somewhere else for a moderate change fee. Check with your airline to see what this would cost. It won’t be free, but it could save you a few hassles.
Brexit, it seems, has ignited anti-EU feelings throughout Europe. In a recent poll 61 percent of people in France said they’d quit the EU if they had the opportunity. Of course, there’s a difference between expressing an opinion hypothetically and actually voting that way—but it shows the British aren’t alone.
A number of other European countries are now angling for similar referendums, and if that happened and they voted the way Britain has, it could see the Netherlands, Portugal, Denmark, Sweden and Greece all leaving the EU. This would have mammoth repercussions on the EU and on travel for Canadians, with the reduction of the Schengen Area and less use of the euro.
None of those referendums may take place and even if they do, none may vote to leave, but the next couple of years could be rather tumultuous for Europe—meaning this summer could be the heyday of European travel for Canadians!
More pressingly in Scotland—whose people voted overwhelmingly to remain in the EU—the question of its succession from the U.K. seems back on the table, though they just voted to remain in October 2014. Given the slim majority enjoyed by Scots wishing to stay in the U.K. during its own referendum, it almost seems inevitable (to me, at least at the moment) that Scotland would choose independence next time so it could rejoin the EU on its own. For the first time in centuries we could see border controls along the Scottish-English border. Wow!
So, by best advice right now? If you want to travel around all of the U.K. using a single currency and only one border entry, perhaps you should consider a trip this year or next, while there still is a “United” Kingdom.