EUROPEAN TOURISM 2010 – Trends & Prospects - VisitBritain

European Tourism in 2010: Trends & Prospects (Q2/2010) 7Economy OverviewWeakening financial markets could dampen consumption• The Eurozone debt crisis has spawned fears of a ‘double-dip’recession• Austerity measures and tax increases will weigh on already weakgrowth in the Eurozone• Financial markets have come under recent pressure but remain inmuch better shape than during the financial crisis• The majority of real economy indicators outside the Eurozonecontinue to show robust growth.Global OverviewRecent weeks have seen a good deal of speculation about a possible ‘doubledip’world recession. These concerns have resulted from the fiscal crisis inEurope, financial market developments and some weak economic data. Whilethese may merit weaker growth forecasts going forward, a global ‘double-dip’recession, while possible, remains less probable than the baseline forecast.In the Eurozone, bond yields in the peripheral countries have been creeping upagain due to lingering fears of default and investor concerns about the growthimplications of recent fiscal packages. Austerity measures have also beenintroduced in France, Italy and Germany, implying a weaker growth picture inthe hitherto relatively solid ‘core’ countries. With growth forecast at just 0.8%this year and 1.3% in 2011, the Eurozone will remain a drag on the worldeconomy and is at risk of slipping back into recession.Speculation of aglobal double-diprecession is likelypremature.Nevertheless, theEurozone will lagbehind the globaleconomy.Eurozone: Government finances% of GDP210-1-2-3-4-5-6Government debt(RHS)Government balance(LHS)-7Forecast-81990 1994 1998 2002 2006 2010Source: Oxford Economics% of GDP95908580757065605550© European Travel Commission, July 2010