- 27 June 2016
- Apex Insight News
The International Air Transport Association (IATA) has indicated in a preliminary report that UK passenger numbers are set to fall between 3-5%, and that the hit to the UK economy is set to be permanent relative to the case if we should have remained.
In a report published over the weekend IATA suggested that, “Impacts vary according to the different scenarios and assumptions used, but broadly point to UK GDP being 2.5-3.5% lower in level terms by 2020 compared to the ‘no Brexit’ baseline.”
Much of UK air passenger numbers are outbound, with nearly 54 million people flying from the UK to other destinations as against around 24 million people flying to the UK from other countries. This is set to fall considerably in the coming years. IATA again predicted, “The direct economic impact is likely to see the UK air passenger market be 3-5% lower by 2020 than the no Brexit baseline. In other words, the outcome of yesterday’s referendum could reduce air passenger growth by 1.0-1.5 percentage points each year over the near term.” The weaker £ should soften this somewhat, with an expected increase in passenger numbers inbound to the UK due to the currency being cheaper.
The impact on trade in the short term is less certain according to IATA. Based on OECD figures it predicted a significant drop in air freight in the next 14 years: “Over the longer-term, however, there will be an impact on international trade when the UK does formally exit the EU and this, in turn, will affect air freight. For example, the OECD estimates that UK trade volumes could fall by 10-20% over the long run (to 2030), relative to the baseline.”
A 10-20% hit to the UK’s international trade over the long term is quite a kick in the teeth.
IATA’s analysis can be seen as a PDF here http://www.iata.org/whatwedo/Documents/economics/impact_of_brexit.pdf