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Two years on: the cost of Brexit for UK travellers abroad

As a UK couple who travelled the world, how has Brexit affected our finances? An analysis of our actual travel spending in the context of pre-referendum exchange rates shows that we are £2,900–£3,500 out of pocket.

It’s no secret that I am not a fan of Brexit. In the lead-up to the 2016 referendum, I volunteered a huge amount of my time for the campaign to remain in the European Union. At the time, however, the impact of Brexit on the mobility of aspiring travellers was not my biggest concern. 

Three days before the vote, I appeared on national television to ask a question at the biggest live debate of the campaign. My question was about the issue closest to my heart: peace. I believe, with strong evidence, that the EU has played an invaluable role in keeping Western Europe together for the last half century, the longest period of peace in recorded history. It has also contributed greatly to peace and development in Eastern Europe.

The cohesion that has grown among European nations has been cultivated by openness. I think it’s a wonderful thing that young people in Europe today can travel around freely. The opportunity to learn about other cultures and languages builds understanding and solidarity.

For young people from the UK, travelling in Europe can be a gateway to the world. I count myself in that number. At 18, I ‘Interrailed’ – a scheme that enables cheap and easy travel around the continent. This opened my eyes to the world, and kickstarted my lifetime passion for travelling.

Travelling in Europe in 2001 aged 18 was an amazing opportunity and broadened my horizons
Travelling in Europe in 2001 aged 18 was an amazing opportunity and broadened my horizons

How the EU has made it easier to travel

Over the years, the EU has introduced measures to incentivise and facilitate easy travel around Europe, especially for young people. I know many people who have benefitted from Erasmus, a scheme that provides students with opportunities to study and work in EU countries.

The EU also makes travel possible through volunteering programmes. The European Voluntary Service, EU Aid Volunteers and the European Solidarity Corps are initiatives that enable people to volunteer abroad, and support disadvantaged or disaster-affected communities.

Just last month, the EU announced that it will give 30,000 free Interrail passes to young people across Europe.

For the wider public, the EU has made travelling cheaper, safer and less hassle. EU regulations have brought airfares down and opened up new flight routes, while blacklisting ‘dangerous’ airlines. The European Health Insurance Card gives EU citizens access to free emergency cover anywhere in Europe. Work permits are no longer required to work in EU countries. The abolition of roaming charges has dramatically reduced the cost of using a phone in Europe. Crossing borders is easy and stress-free. I could go on.

I will discuss the impact of Brexit on all of this later, but first – how has it already affected travellers’ finances? Here’s our story.

The Philippines was one of only two countries (along with Argentina) out of 20 that we visited where we got a better exchange rate than we would have before the referendum
The Philippines was one of only two countries (along with Argentina) out of 20 we visited where we got a better exchange rate than we would have before the referendum. In both cases, the local currency had suffered extended downturns

How Brexit affected the cost of our world travel

I will begin by pointing out that there is no way to calculate the exact effect of Brexit on the cost of travel abroad. Currencies around the world fluctuate for all sorts of reasons, and it’s very difficult to assign change over time to any single factor.

What we do know, however, is that the pound sterling crashed overnight when the UK voted to leave the EU. The British currency collapsed by 19% against the dollar, falling to a 31-year low in a matter of hours. Banks and shares were hit hard.

While there has been some recovery since, it has been sluggish at best, and the pound remains much weaker than pre-referendum levels.

The immediate effect

At the time, we were one year away from a travelling adventure for which we had been saving for four years, and so we were incredibly worried. It was obvious that any travel abroad was suddenly going to be a lot more expensive.

It didn’t take long for our concerns to translate into monetary losses. We had already been quoted a price for our main world flight package, but the actual fares weren’t released until July 2016. When I got the call from the representative at our travel agency, he barely tiptoed around the situation:

“I’m guessing our previous estimate no longer stands?”

“Well, there have been some fluctuations in the market…”

We were already out of pocket – the price of our flight packages had gone up by £144. On our savings budget, that was a month’s worth of food. But as we feared, this was only the beginning…

Our five weeks in Australia alone were several hundred pounds more expensive as a result of the weakened pound
Our five weeks in Australia alone were hundreds of pounds more expensive as a result of the weakened pound

How I calculated the impact of Brexit on our travel costs

Last week I published the costs of our 11-month world adventure in a new series of articles on travel money. That article detailed the countres we visited and hence the currencies that we used.

Our total expenditure was £39,078.39 for 11 months of travelling from June 2017. For the sake of travel analysis in the previous article I excluded the cost of a three-day layover in Miami at the beginning of our trip – here I am including it to show the full impact of Brexit on our outlay.

As I have already outlined, there is no way to pinpoint with 100% accuracy the direct effect of Brexit on our costs. To give a broad picture, I have looked at three different scenarios:

  1. Exchange rates on 23 June 2016, the day before the pound sterling crash
  2. Average exchange rates during May 2016, the month before the referendum
  3. Average exchange rates during the entirety of 2015, the year before the referendum

To calculate the exchange rates, I have used publicly available information from www.xe.com, www.oanda.com and www.ofx.com. These are all independent services that provide historical data, tools and resources on world currencies. I would have preferred to use a single source, but none provided the full information I needed (for example, xe.com doesn’t provide monthly averages, and ofx.com doesn’t hold information on all the currencies we used).

For each scenario, I have calculated how much our travel expenditure would have been if we had done exactly the same things on our trip, and then compared it with our actual expenditure:

Let’s begin with the day of the referendum.

Scenario 1: 23 June 2016 vs our actual expenditure

On the surface, this is the comparison that looks the worst, but there is more to it (see ‘the Argentina anomaly’ below).

If currency exchange rates when we travelled had been exactly as they were on 23 June 2016, our trip would have cost £36,467.85. That’s £2,610.54 less than we actually spent.

As it took us roughly five years to save for our trip, on average we saved around £650 per month. So in this scenario, Brexit cost us four months’ worth of savings.

Scenario 2: May 2016 vs our actual expenditure

This scenario looks better, but not by much. Based on the average exchange rates for May 2016, our trip would have cost 36,751.28. That’s £2,327.11 less than our actual expenditure. Or, if you like, about three and a half months of our savings.

Scenario 3: 2015 vs our actual expenditure

The final scenario shows the lowest impact on the face of it, but a closer examination of the data reveals that it may actually be the worst of all, which I will explain.

If we base our costs on average currency exchange rates for the whole of 2015, our trip would have cost £38,639.70, which is just £438.69 less than we spent (but still no drop in the ocean).

It turns out there is a very clear reason for this difference. Read on…

The Argentine peso is the only currency of the countries we visited that showed very little movement against the pound in June 2016
The Argentine peso is the only currency of the countries we visited that showed little movement against the pound in June 2016

Skewing the data: the Argentina anomaly

When looking at the effect of the weakened pound against the different individual currencies we used on our trip, I noticed rather a strange exception to the rule. In the 24 hours following the referendum result, the pound fell drastically against every currency on our list. All except for one, that is – the Argentine peso.

On 23/24 June 2016, the Argentine peso showed very little movement at all against the pound when compared with the landslide shifts elsewhere. I have absolutely no idea why this is – if anyone reading this does, I would love to hear from you!

Even more striking than this, and vital to this analysis, is the general trend of the Argentine peso. Over the last five years it has grown weaker and weaker, to the point that the country has made global headlines in 2018 for reaching the verge of economic crisis. Incredibly, the peso has weakened from 8.27 to the pound in June 2013, to 37.23 to the pound in 2018.

This causes an obvious problem when analysing how Brexit has affected our travel spending. It means the Argentine peso cannot be treated in the same way as the other currencies, as it deviates so wildly from the pattern they follow. It is an outlier, and causes a big skew in the overall outcome as we spent two months in Argentina. 

The comparison of our actual spending against 2015 average exchange rates is most notably affected. Before the referendum even happened, the peso had moved from a 14.13 average against the pound during 2015, to 20.52 against the pound on 23 June 2016, ahead of the pound crash. By the time we visited the country, the rate was nearly 23 pesos to the pound. Had our Argentina been in 2015, we would have spent over £3,000 more as the peso was much stronger then.

As Argentina’s currency and economic woes are unrelated to Brexit, and cause such a data skew, I decided to see how the overall picture would look if I simply removed our Argentina costs.

The outcome was as follows, noting that with Argentina removed entirely, our overall travel costs come down to £34,159.39:

  • Based on scenario 1 (vs 23 June 2016 rates), our trip would have cost £31,190.93, which is £2,968.47 less than our actual spending;
  • Based on scenario 2 (vs May 2016 average rates), our trip would have cost £31,237.78, which is £2,921.61 less than our actual spending;
  • Based on scenario 3 (vs 2015 average rates), our trip would have cost £30,632.84, which is £3,526.55 less than our actual spending.

With our time in Argentina removed, this adjusted analysis covers a 9-month period of our travels. To find a yearly average, we now need to multiply these figures by 1⅓. This would indicate that a couple travelling the world on a similar route to ours for a year from June 2017 would have spent between £3,895 and £4,702 more as a result of Brexit. By proportion, that’s a cost increase of between 8.6% and 10.3%.

You may be reading this section and thinking “hey, you are fiddling with the data to suit your agenda!”. No – it really is an anomaly, and I can prove it. I tried removing each other currency in our list, one at a time, to see how the overall result would be affected. There was barely any change – no currency affected the outcome by more than 0.6%. It’s safe to say that the removal of Argentina gives a more accurate analysis of the impact of Brexit on our travel costs.

This chart shows the currencies of the countries we spent the most time in, and the change in the value of the pound against them between the three scenario periods and the time of our visit.

As you can see, the only currency other than the Argentine peso for which we got a more favourable rate visiting post-Brexit was the Philippine piso. Unlike the Argentine peso, however, the Philippine piso did show a sudden swing against the pound after the EU referendum. The piso’s extended slide does skew the data slightly, but not enough to have a significant effect on the big picture.

Is this a fair estimate?

By using three different comparison points between currency exchange rates before the referendum and our exact spending abroad afterwards, it is clear that Brexit has had a grievous impact on our costs.

Whether any external factors exist that affect these findings is difficult to say, but there’s no reason to assume their effect would be to exaggerate the impact of Brexit. It seems just as likely that unknown factors would mitigate the impact.

Of the different currencies we used, some have strengthened over the last two years, some have weakened, and some have stagnated. In summary: I cannot see a reason why these findings do not reflect reality.

If anyone reading this has any doubts about my calculations or approach, I would be very happy to share my workings and methodology with you. I’ve got a mega spreadsheet with some funky formulas, and clear details of the various exchange rates with references. Just drop me an email at alex@careergappers.com and I will share it with you.

Is Brexit changing the image of the UK abroad?

The impact on finances is not the only negative effect of Brexit for UK travellers abroad. As our journey progressed, the feeling crept upon me that something had fundamentally changed in the way the UK was viewed by the rest of the world.

I recently read a powerful article by Chris Grey, a professor at Royal Holloway University of London, that hits the nail on the head on this point. After spending some time abroad, he wrote:

“In the same way as a few years ago a typical conversation with, say, a taxi driver in Europe would be about Manchester United or pop music or, I don’t know, Princess Diana, now when someone knows you are British what comes to their mind is ‘Brexit’. That – just in itself – is indicative and problematic.”

This sums up perfectly so many of our conversations with new acquaintances on our travels. Brexit has usurped everything else that comes to mind about the British identity, and not in a positive way. Professor Grey goes on to write:

“There’s been much written about Brexit and British or English self-identity, but less about what it has done to our identity in the eyes of others. And it is not good. No one I’ve spoken to sees it as connoting some leap to freedom, or the opening up of new vistas of opportunity for Britain; still less as a template that they would wish to see their own countries adopt.”

I lost count of the amount of times I heard comments like “what’s the deal with Brexit then?” or “why would anyone vote for something so damaging? I don’t understand, it seems crazy”, usually uttered in a bemused but concerned tone.

Sometimes people we meet are tentative about the subject until we make clear our own frustrations with it, but the reactions that follow are all the same. During our time away, I don’t think I met one person from outside the UK who thought Brexit a good idea, or likely to have a positive outcome for anyone.

I have returned from our travels with an overwhelming sense that the UK’s standing in the world has already been diminished greatly by Brexit. It is alienating our relationships abroad, and at home the situation is a complete mess. It is swallowing up all of our government’s time, and it is becoming clearer by the day that there will be no benefit and a huge amount of pain.

Aside from the financial loss we have incurred, which is a big setback at this stage of our lives, it is this diminishment of the UK’s international image that makes me saddest of all.

How will Brexit affect the travellers of the future?

Nothing is yet clear about the details of the UK’s post-Brexit relationship with Europe, but it is inevitable that travelling is not going to be as easy for future generations.

There has already been talk that Brits will need to pay visa fees to visit EU countries. All the travel benefits and opportunities I mentioned at the beginning of this article are now under threat. Low flight prices, free data roaming, youth travel initiatives, hassle-free border crossings, security regulations; these are all on the negotiating table, and we won’t get everything we want, if anything.

The pound is still much weaker than it was before the referendum, so UK travellers remain out of pocket. This might improve over time, but there is no guarantee. Through a mixture of privilege, hard work and sheer luck, Lisa and I have been in a position that we could withstand such a setback to our finances. For people less fortunate it will mean that travelling simply isn’t possible.

As I write this, it is exactly two years since the UK voted to leave the EU. Nothing has happened during this time to convince me that life will be better for anyone as a result. For travellers – as our experience shows – things have got a lot worse.

If you want European travel to remain open and accessible, and for future generations to have the same opportunities, then make your voice heard. Join a local campaign group. Write to your MP. Get involved in national action. Open Britain is a great place to start. Don’t delay.

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As a UK couple who travelled the world, how has Brexit affected our finances? An analysis of our actual travel spending in the context of pre-referendum exchange rates shows that we are £3,000–£3,500 out of pocket.

 

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3 comments

  1. Brilliant article. Theresa May, Liam Fox, David Davies and Boris Johnson should have this article rammed down their throats.

  2. I completely agree with your intro about all the good things that being part of the EU has done for Great Britain and British people. The good far outweighs the bad (even with the misconstrued lies the press feed people). It just makes be feel so sad that we are taking a backwards step. I live in Spain at the moment and earn/spend euros so have seen the travel cost change that you have experienced but I’m sure that I will soon. I’m really worried about the perception the rest of the World will have of us now. To be honest I do not want to be associated with Brexit at all, so will be applying for a visa as soon as possible and will never again live in my home country.

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