UK tourism growth levels off

In July, the tourism and recreation sector saw its growth rate ease, falling to 55.3 from 63.1 in June, a level which was the strongest output growth recorded since January 2012, according to the Lloyds Bank UK recovery tracker.

Businesses pointed to a levelling-off in forward bookings for UK holidays, and cited restricted capacity caused by staff shortages – a key challenge also reported by firms in transportation (51.5 vs. 51.8 in June), particularly among hauliers.

The UK’s tourism and recreation sector – which includes pubs, hotels, restaurants, travel agents and leisure facilities – saw its output growth contract in July as businesses faced a levelling-off in forward bookings for UK holidays, and restricted capacity caused by staff shortages.

Jeavon Lolay, head of economics and market insight, Lloyds,said: “As the economy edges back towards pre-pandemic GDP levels, there will understandably be less capacity for such rapid and out-sized gains.

“The latest report for July supports this, with both fewer sectors posting faster month-on-month growth in output and a marked drop in optimism around future growth prospects.”

Scott Barton, managing director, corporate and institutional coverage, Lloyds,said: “While the UK recovery remains on solid ground, staff shortages and higher materials costs are clearly disrupting current business activity and future prospects, most notably in the hospitality sector.

“Recent adjustments to the self-isolation rules should help alleviate staff shortages. However, the ongoing impact of the pandemic and Brexit may result in labour market pressures that persist for some time longer. Against this backdrop, management teams will be urgently considering how they can ensure their growth ambitions remain on track.”

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