Taylor on Travel

A double-dip recession moved a big step closer with news the UK economy contracted by 0.5% in the last quarter of 2010. Indeed, we may already be in recession - defined as two consecutive quarters of falling GDP.

No one foresaw the contraction. The most pessimistic view was that the economy had reached a "virtual standstill" represented by 0.2% growth in the last quarter. A majority of economists assumed a higher growth rate.

The snow immediately before Christmas and the coldest December in a century will undoubtedly have been factors. But these do not adequately explain the decline. Government's figures show disturbing quarterly declines in construction (-3.3%) and business services and finance (-0.7%). The latter will not have been unduly affected by snow, while the construction sector is frequently a bellwether for the economy as a whole.

Output across services and in the distribution, hotels and restaurants sector fell by 0.5%, while in transport, storage and communications output fell by 0.8%. Of course, snow could be a factor here, but growth must have been pretty lousy before December's bad weather to drag the quarterly figures so low.

Manufacturing produced the best figures, up 1.4% in the three months. The problem is that manufacturing companies would have been anticipating Christmas sales and would, in any case, be likely to slow down only if managements felt the economy was slowing. No one told them. The figures for manufacturing output this quarter will be interesting.

Add in the latest inflation figure - 3.7% or 4.8% depending on the measure you take - unemployment at 2.5 million and the bulk of public-spending cuts still to come, and the news on the economy is far from good.

A monthly survey by economic consultancy Markit suggests one in three UK households are suffering falling income and "running just to stand still".

It would be a shame if this takes the shine off the bright start to the year for travel - with retailers recording their best January since the financial meltdown of 2008 and analyst GfK Ascent reporting season-to-date sales for summer 2011 up 5% year on year up to last Saturday. But the contractions in GDP and income must have an impact. The question will be how far the pain extends, and for how long.

Travel companies operating to Egypt understandably view the developing protests in the country with some alarm.

The resulting anxieties about the welfare of clients are real, as are the implications of possible cancellations, changing Foreign Office advice and potential need for repatriation - to say nothing of the impact on bookings to what has become a major destination.

But the deaths of protestors, imprisonment without trial and desire for democracy are real too.

The popular overthrow of the Ben Ali regime in Tunisia less than a fortnight ago saw the suspension of tour operators' flights to the country and condemnation in the media of British Airways for continuing to fly to Tunis. Thomson Airways and Thomas Cook have yet to resume flying. Hopefully, Foreign Office guidance will soon allow them to do so. But in the meantime all kinds of new possibilities have opened for many Tunisian people. In time, this might make the country more alluring than ever for tourists.

There is an industry tendency to view such an event as a setback. In reality, travel and tourism has no reason to fear popular regime change.

Bookings may suffer in the short term from fears of protests or violence engulfing visitors, regardless of whether these fears are justified in resorts. But history shows tourists do return when a situation stabilises, often with fresh interest in a country and amid new opportunities for developing the sector. Real problems only arise when instability and a repressive response to it become prolonged.

If protests or strikes of themselves deterred visitors, France and Spain might struggle to be major destinations let alone the biggest.

If the toppling of repressive regimes was inherently a problem, Eastern Europe would not have opened to tourism as it did after 1989, Spain would not have developed as the destination it has in the wake of General Franco and Greece would have struggled following the demise of the colonels' regime in 1974.

The concern with which the trade views events in Egypt is reasonable. Lives and livelihoods are at stake, and companies have both a legal and moral responsibility for the people they send abroad.

But concerns about the potential for violence to escalate are not the same as a desire for stability at any cost. The bigger picture is that, long term, democratic reforms are good for travel and travellers, and repression is not.