3 Ways Brexit Will Make Global Travel Cheaper
The word "Brexit" has been echoing through the microphones of international journalists for months now. Will the United Kingdom stay in the European Union? Will they vote to leave? No one could say for sure. This morning, the world awoke to an answer: the votes are in, and the UK has chosen to leave the EU.
As a human with a pulse (and a 401k), I am horrified about what could happen in the coming months in the economic world. But as a traveler, I am elated. Here's why:
Travel to the UK just got a whole lot cheaper.
The pound is (at time of writing) around 1.36 to 1 USD. This is the lowest it has been in 35 years. Unfortunately for me, I just spent a week in London, when the exchange rate was around 1.45 to 1 USD. If only I'd waited until today! As of right now, anything you purchase in pounds when you travel to in UK -- lodging, food, activities, you name it -- is effectively cheaper today than it was yesterday.
The dollar is stronger.
Whenever there is uncertainty in a country's economic future, its currency will be affected (if the currency "free-floats" that is). With the UK's economic future in doubt, its Pound Sterling is not as safe a bet in the eyes of currency investors in the world. Where do they head if they'd like to park their money in a safe currency? The dollar. (Well, the dollar and gold.)
As of the time of this writing, the dollar is stronger than it was yesterday, and that means goods will be a bit cheaper for everyone who's traveling abroad this summer. This is good for American businesses and investors, but bad for our international visitors. Now the U.S. is even more expensive for foreign travelers, as they must buy dollars with their weakened domestic currency.
Oil is cheaper.
Oil prices were affected by the news that Britain would leave the EU. The theory is that by leaving the EU, Britain will see less investment in things like building new roads, improving infrastructure, and other things that need lots of energy to complete. Because oil is still the major energy source for construction companies, over-leveraged economies that depend on oil, like Colombia, Nigeria, and Russia, are going to see a dip in their GDP, and a weaker currency as a result of the plunging price of oil.
While it's not good news for the people who live in these countries, for international travelers, countries that depend on oil are going to be proportionally cheaper to travel to than non-oil dependent economies as oil prices drip.
While I certainly feel for those in the UK who voted to remain, for those of us outside of the UK who enjoy traveling internationally without spending our life savings, this news isn't so bad. If you've been waiting to buy a pair of tickets to Harry Potter and the Cursed Child, today's pounding of the pound should make your dream of seeing the super-popular London play a little cheaper.