Usually, the problems Greece is experiencing would be good news for tourists. The next logical step with an economy so far gone would be for the government to devalue its currency and tourists would see real value until inflation kicked in.
Except that can’t happen because Greece is in the Euro. It looks like Greece will receive some sort of bail out from the EU, but there will be a price to pay. With no capacity to set its own monetary policy the pressure is on Greece to reduce its deficit and the only way the Greek government can do this is to raise taxes and attack its workers’ living conditions.
The Telegraph joked that raising taxes is futile because tax-avoidance has long been a Greek national sport. This may be true, but it must be closely followed by striking, an activity where the Greeks make even the French look like amateurs. Today saw many workers, including taxi drivers, strike across Greece.
Amidst all the current uncertainty, one thing is almost predictable; Greece will plunge even deeper into recession this summer. So what effect will this have on tourism? Will there be strikes and civil unrest? From a financial point of view prices could well drop and with reduced domestic demand, hotels will be keener than ever to have UK visitors.
The weakness of the Greek economy and the PIGS (Portugal, Ireland, Greece, Spain) in general will at least serve to keep the Euro comparatively weak against sterling, which will be good news for UK travel companies. They’ll just have to deal with the air-traffic control strikes when they happen!
Photo by jonrawlinson
