Leadership and Democracy LabWestern Social Science

Brexit: A Hard Landing for French Tourism

Primary Contributor – Rebecca Rees

Leader: Blaine Yonemitsu

On June 23rd 2016, the United Kingdom (“UK”) held a referendum to decide whether the country would separate from or remain a part of the European Union (“EU”). As the results poured in late that night, it became clear that the UK had voted to leave the EU. Although the immediate focus following the so-called “Brexit decision” was on the futures of the UK and the EU, just across the English Channel was France, whose economy would be forever changed due to the vote. 

Created following the Second World War, the EU was designed to create economic and political cooperation between European powers with the motivation being that interlinked economies would not go to war. Today, the EU has 28 member countries, its own currency (the “Euro”, used by 18 member countries), and its own parliament. These measures have allowed the EU to become a “single market” in which goods, services, and people can flow across the borders of member countries as if they were never crossing borders.

The Brexit referendum was a vote to decide whether the UK wanted to continue being part of this partnership. Voter turnout was high—71%—and the “leave” vote garnered the most support with a narrow 52% as opposed to the 48% of votes that supported the “stay” side. Although the process that the UK will use to leave the EU is entirely clear, what is certain is that leaving the EU will first require that the UK invoke Article 50 of the Lisbon Treaty. Article 50 is the provision that allows the UK to withdraw from the EU, and once invoked it provides for two years of negotiations. Following the expiry of two year period, the UK and EU will be formally separated regardless of the outcome of the negotiations that took place during the two year period.

The economic implications of Brexit are still unknown, though they are largely viewed with trepidation. Since the Brexit referendum, the value of the pound sterling has reached a 30-year low, dropping to approximately €1.19 from €1.40. This immediate consequence of Brexit makes Europe—and most foreign markets—far more expensive for British tourists. This means that the number of British tourists can be expected to fall, which is a particular concern for France since it is one of the highest ranking European holiday destinations for British travellers. Each year, about 12 million British tourists take their holidays in France. With tourism contributing to 7.4% of France’s total GPD in 2014, a fall in the number of British tourists could have a significant impact on the French economy.

Further aggravating this is that the depreciation of the pound sterling as compared to the Euro means that it is now more economical for Europeans to travel to the UK. Travellers may therefore be persuaded to opt for a British holiday rather than a holiday in France. This will have the effect of decreasing the number of Europeans travelling to France while at the same time France suffers a decrease in the number of British tourists. French citizens also seem interested in holidaying in Britain rather than travelling domestically, as the number of searches for flights form France to the UK increased 130% in the day following the Brexit decision. While all of this is good news for the British economy, it poses a significant threat to the French tourism industry.

The impact of Brexit on the French economy could not have come at a worse time. France is already reeling from a decrease in tourism due to recent high-profile terrorist attacks. As France reasserts its position as a safe tourist destination, it must also highlight the benefits of spending an increased amount of money to travel to the country. Price cuts may be a reality that the tourism industry will have to stomach. France may also have to increase marketing efforts in other countries in an attempt to replace lost British tourists.