Originally the single currency was intended to be a great leveller across the entire Eurozone. This never happened and you will still pay more for Diet Coke in Paris than you will in Athens. The turmoil we have had recently right up to this weekend’s (9th/10th of June 2012) €100Billion bailout of Spain’s banking sector has depressed the value of the Euro meaning that you now get more Euros for your pound.
The Eurozone crisis has lead to mass unemployment in Greece, Spain, Portugal and Ireland and unless something changes where is the growth going to come from? One of the reasons that dropping out of the Euro is so attractive to Greece is that any ‘New Drachma’ would be worth a lot less than the Euro and Greece would become very cheap for people to visit. What the Greek people are pinning their future on is that with a devalued currency their products become significantly cheaper as is Greece as a destination. Greece could literally become ‘Europe’s beach resort’ where everyone can afford to go.
Leaving the Euro is not a realistic proposition for Spain, Portugal or Ireland or even for Italy if you want to include the most pessimistic of pessimists’ predictions. This means that they cannot devalue their currency to make their goods and services cheaper. With austerity still the fashion across Europe, even in French President François Hollande’s spending plans are still very much in the austerity mold it is hard to see how economies are going to grow.
For the next twelve months at least it appears that these crisis afflicted countries are going to represent excellent value for money for the UK traveler. In all of these countries ,where high unemployment is a dominant factor, wages are going to be falling and throughout the tourist industry it is staff costs that contribute most to the fees passed on to the tourist. In the longer term whatever happens to Greece they are almost certainly going to be one of the best alue for money destinations in Europe rivaling Turkey.
What about the US?
Right now the US Dollar is seen as a safe haven currency like the Pound and Swiss Franc. For the most part as the Dollar has risen against the Euro, the Pound has risen with it. It is only in the last month to six weeks that the Dollar has increased in value against the pound. This time last year £100 would buy $180, right now £100 will only get you $153.This is more to do with the trading figures from the US and UK than with the Euro crisis itself. It is hard to say what will happen but as the number of visitors to the US from Europe fall it is likely that you will see some really good deals on US holidays even if the exchange rate is nothing to sing and dance about.
All around the world
The other most popular destinations tell a very similar story, the Thai Baht is worth slightly more than this time last year as is the Australia Dollar and New Zealand Dollar. One currency that is making holidays more attractive is the Mexican Peso.
Last year you would have got $18 to the pound and right now it is nearer $21. Mexico is not that expensive to get to with flights from a little over £500, flying with Virgin Atlantic to Cancun, and if everything is nearly 20% cheaper than it was 12 months ago because of the exchange rate it may be worth considering. Out of curiosity you will notice that the Mexican Peso uses the same currency symbol as the US Dollar. This is because they [the symbols] are both derived from the Spanish dollar symbol of the 15th to 19th century.
The conclusion is that you can find some bargains right now but they are unlikely to be in the most popular destinations outside of Europe. If you are prepared to go further afield then Mexico does represent good value for money right now. If you want to stay nearer to home then look at Greece, Portugal and Spain where it is not only the exchange rate that helps but cheap prices on accommodation and food make holidays more attractive.
In the future we are looking at producing country specific guides. Is there any specific countries you would like us to cover?