by: Samuel Hill
The United Kingdom has been in a constant state of flux since the Brexit referendum was passed in 2016, and with the UK general election being held on Dec. 12, the likely final election to either push the UK out of the European Union or keep them there, Europe as a whole is going to be affected.
One of the biggest topics of discussion among people is how a possible British exit from the EU will affect both sides, specifically the UK’s accessibility to the EU single market.
According to the official website of the European Union, the single market refers to the EU as “one territory without any internal borders or other regulatory obstacles to the free movement of goods and services. A functioning single market stimulates competition and trade, improves efficiency, raises quality, and helps cut prices.”, so without the single market, the UK would lose many of the freedoms it offers.
In the situation of the UK losing the single market and the advantages it provides, arguably the biggest blow will be dealt to the Labour freedoms the UK takes advantage of, specifically through its travel and tourism markets.
The travel and tourism industry
The travel and tourism industry is one of the UK’s most profitable and prestigious branches of state.
According to a 2019 statistic by the Tourism Alliance, the tourism industry brought in 7.2% (£145.9 billion) of the UK’s 2018 GDP (Gross Domestic Product), making it the “seventh largest international tourism destination ranked by visitor numbers” as well as the “fifth largest international tourism destination ranked by visitor expenditure.” (UK Tourism Statistics 2019)
The tourism industry has even seen positive growth since 2016.
“Industry statistics show that the UK’s tourism sector has grown by £18.5 billion since 2016,” Chief Executive Officer of UKHospitality Kate Nicholls said. “It is possible that the relative weakness of the Pound has encouraged more visitors to the UK to take advantage of relatively cheap prices…the trends have been positive for tourism and there has certainly been no evidence of a “backlash” or dip in the attractiveness of the UK as a destination.”
Where some UK investors believe the industry hasn’t been affected much by Brexit, others feel the effects of Brexit are already apparent.
“We’re seeing a reduction in European arrivals, potentially due to the fact that mainland Europe sees UK in a negative light as a result of Brexit,” CEO of Scottish Tourism Alliance Scotland Marc Crothall said. “Scotland has a strong, resilient tourism industry committed to success and driving our national growth ambition, however the challenges that we’re experiencing at the moment, compounded by the headwinds of Brexit, are taking our industry to a very fragile place.”
According to an Aug. 2019 study done by Visit Britain, visits from all European Union countries were up 2% in Aug. 2019 to 2.5 million (compared to Aug. 2018 statistics). The EU15, the original member countries in the European Union prior to the accession of ten candidate countries on 1 May 2004, saw a 5% increase compared to their Aug. 2018 statistic but saw no change in a rolling 12-month total (Sep. 2018- Aug. 2019 compared to Sep. 2017- Aug. 2018).
Visits from the rest of the EU states, those not a part of the EU15, were down 7% compared to Aug. 2018 statistics, while visits from the rest of Europe were down 19% since Aug. 2018.
The bigger problem
The loss of the single market within the UK will be even more monumental when you consider the services what would be lost.
Services are a “crucial” part of the single market, accounting for “over 70% of all economic activity in the EU and a similar proportion of its employment.” (The official site of the European Union)
“What has been reported in the media here [that is] actually related to the hospitality sector is the decline in EU workers coming to work in the industry and the difficulty of replacing those EU workers, particularly in remote areas,” Dr. William Vlcek, Senior Lecturer and Director of Teaching at the University of St. Andrews, said. “The individuals that are coming over are the same individuals that have been working in [the industry] for [10-15] years. In some cases, [if they’re there], they’ve got the knowledge and the training and all of that and keep returning, so replacing some of [those people] would be a bit more difficult.”
As presented to the UK Parliament in Dec. 2018, Her Majesty’s Government (UK) is set to take control of its immigration, stating that “everyone will be required to obtain permission if they want to come to the UK and work and study here”, as well as prioritizing “a highly skilled, innovative and highly productive workforce.”
With a new “skills-assessed” system, those in jobs the government categorises as lowly skilled, including many jobs held in the tourism industry, would be unlikely to qualify for a visa.
“The chief concern revolves around the sector’s ability to hire new staff. This is the case for both hospitality and tourism. These sectors are already finding it difficult to recruit and any additional restrictions to immigration will make the situation even more challenging for employers,” Nicholls said. “One in eight team members in the hospitality sector is from overseas and around half of these are from the EU, any post-Brexit immigration system which seriously restricts immigration would certainly have a negative effect on business. A points-based immigration system could work, but only if it takes into account the needs of the economy.”
According to a 2016 study done by The Office of National Statistics, 11% (3.4 million +/- 0.2 million) of the UK labour market (30.3 million +/- 0.3 million) were non-UK nationals; EU nationals contributed 7% (2.2 million +/- 0.1 million) and non-EU nationals 4% (1.2 million +/- 0.1 million).
“There is no doubt that the government’s plans will exacerbate the existing recruitment challenge the industry is already facing,” Crothall said. “What we are hearing is there has been a steady decline in international workforce retention and significant decline in applications from foreign parts. With there not being a sufficient number of skilled workforce available to tap into, this places the sector, which is one of the most important economic drivers for [the UK], in severe jeopardy.”
While the final stance on how EU citizens living outside of the UK will be able to gain access is still not completely clear, those from abroad living in the UK have a concrete outlook, or at least one more potent than before.
According to the same “UK’s future skills-based immigration system” presentation given to the UK Parliament by its government, it is written that during the Implementation Period (transition from inside the EU to out of it), EU citizens currently living in the UK will have “the opportunity to secure their future residence in the UK” with the EU Settlement Scheme, an application that enables qualifying nationals to continue their residence in the UK after it leaves the EU.
“The reason that these seasonal workers are coming in from elsewhere is because local folks weren’t interested in picking up those jobs, particularly if they’re seasonal,” Vlcek said. “There’s always going to be a demand for certain work that can really take a big hit by something like Brexit.
Whether it be in industry’s employment department or in it’s financial, something as monumental as Brexit will undoubtedly change the outlook of the UK as a whole, let alone the travel and tourism industry.
“Food and drink costs will almost certainly be further impacted post Brexit and with a weakening pound, this reduces margins even further for hospitality businesses,” Crothall said. “The continued erosion of profit is a huge issue for all businesses within the tourism sector and with the current level of uncertainty around Brexit it doesn’t make sense for businesses to risk investing in their businesses, which impacts the quality of the product and service they’re able to offer.”
Whether or not the UK reach a deal to keep policy and regulations regarding the travel and tourism industry in place post-Brexit, the industry itself will remain an intrical part of the UK’s government and economic growth.
“Tourism is one of the UK’s major success stories,” UKinbound CEO Joss Croft was quoted saying in an article by Antonia Wilson of The Guardian. “Growing employment across the whole of the country, demonstrating the UK’s soft power, supporting education, investment and trade and showing the UK as open, tolerant and welcoming. It cannot and must not be taken for granted.”