Regardless of one’s opinion of Donald Trump, he will likely follow through on his major initiatives and the threats he makes.
In many ways, his approach to U.S. politics mirrors Ryanair’s, using the strategic threat of withdrawal of support to secure favourable terms. Like Ryanair, which frequently leverages the possibility of removing its flight operations to negotiate ultra-low airport rates, he employs similar tactics to ensure his demands are met.
The United States is a global superpower, and Trump’s decisions will affect the UK and its economy in various ways. Focusing specifically on travel, let’s examine the potential impacts on outbound holiday prices.
Trump has pledged to end the Russia-Ukraine conflict, using the leverage of either reducing or doubling arms support to Ukraine to bring President Putin to the negotiating table, accepting current territorial gains and a ban on Ukraine joining NATO as conditions for peace. I believe this approach will succeed, significantly easing restrictions on Russian gas and oil exports.
Similarly, he plans to push Israel toward a Palestinian agreement, stabilising the Middle East and further reducing oil prices.
Finally, Trump intends to roll back Biden’s green policies to control global warming, adopting a ‘Drill, baby, drill’ approach to boosting U.S. gas and oil production.
Conclusion: Aviation fuel prices will likely fall in the coming years, reducing holiday costs.
The dollar’s strength is the second most significant factor affecting flight prices, as nearly all low-cost airlines lease aircraft in dollars. Since Trump’s election, the dollar has strengthened against the pound, pushing up costs.
The trajectory of this trend hinges on the economic ramifications of Trump’s “America First” agenda, including potential 60% tariffs on Chinese imports and the deportation of up to 10 million undocumented workers. As many analysts predict, these policies could trigger an inflationary spiral, potentially leading to interest rate hikes that may paradoxically bolster the dollar while diminishing domestic wealth.
Elon Musk’s appointment as a special advisor on government efficiency could prove more impactful. By leveraging AI technology to reduce federal spending by $2 trillion over the next decade, Musk’s initiatives could significantly boost economic growth and strengthen the dollar.
Conclusion: Uncertain, but a stronger dollar seems a more likely outcome pushing up flight prices, but this is likely to be more than offset by reduced fuel costs.
The strength of the pound relative to the Euro of other European beach destinations impacts both accommodation costs and customers’ spending power in resort.
The value of the pound fairs is primarily due to our own government actions, and so far, the city has not reacted well to the massive increase in taxation required to fund the Labour Government’s investment in public services.
I believe an impending trade war within the next six months could reveal a significant Brexit advantage. Unlike Europe, which is constrained by conflicting interests among its major economies, the UK could strategically position itself as a neutral party and potentially negotiate favourable terms with both the USA and China.
The electric vehicle market exemplifies this opportunity. U.S. tariffs will likely stifle domestic demand for non-American EVs, affecting Chinese manufacturers like BYD and European automakers. Consequently, these companies may view the UK as an attractive market. The question is: what trade concessions should we demand in return?
Historically, the UK has maintained a laissez-faire approach to free trade. However, it’s time to pivot towards becoming a strategic tariff-trading nation. For example, if we reached an EV tariff-free agreement with Europe, we could offer USA and/or Chinese manufacturers a cost-effective gateway into Europe, contingent on establishing production facilities within the UK. This would leverage our unique position in the global trade landscape.
Conclusion: Impossible to predict, but given the pound’s current low value, I could see a build-back if Labour get these tricky negotiations right, reducing holiday prices.
President Trump is not even in power yet, and many are rightly scared of his potential impact on the world. However, I prefer to live in the positive camp and think we will implement one of my political party’s key objectives, “Kill less People.” Consequently, he will stabilise the fossil fuel energy supply, reducing aviation costs and boosting travel. However, the impact on the “Green Revolution” is highly worrying, and I do not doubt that Trump’s election will harm global warming and the planet’s long-term health. However, we can at least have some cheaper holidays while the world burns