“Brexit debate could hurt Iceland tourism”

Photo: Eggert Jóhannesson

Photo: Eggert Jóhannesson mbl.is/Eggert Jóhannesson

A British vote to leave the European Union (EU) this summer could have an indirect negative effect on Iceland’s tourism industry, says a leading economist.

According to Jón Bjarki Bentsson of Íslandsbanki, the uncertainty created by the upcoming EU referendum in the United Kingdom – set for 23 June – is one of the factors contributing to the falling pound.

The pound plunged to a 7-year low earlier this week after Mayor of London Boris Johnson officially threw his weight behind the campaign for the UK to leave the 28-country bloc, reports the BBC.

If the pound continues to fall in value, this could cut demand from British tourists for travel to Iceland, says Bentsson. More than one in three tourists visiting Iceland this winter were from the United Kingdom, making it a precious market for Icelandic tourism.

“The long-term explanation for the weakening pound is the UK’s slower economic recovery, and slower than expected rises in inflation,” explains Bentsson. “On top of this, the value of the pound is currently very sensitive to the market’s perception of the likelihood of the UK leaving the EU.”

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