The nature of tourism in Europe is a hot topic: mass protests (water guns not compulsory) have emerged in several leading destinations, but, while competitors are experiencing pushback against overtourism, the UK finds itself facing a different challenge.

Here, the issue is not one of excess, but rather of stumbling growth in one of the country’s main service exports.

For tourism, the post-pandemic recovery remains incomplete. Official data from the Office for National Statistics (ONS) showed that 39.2 million overseas tourists visited the UK last year. Though this represents an impressive annual increase over 2023, inbound visits remained 4.0% short of 2019’s figure of 40.9 million.

Looking to this year, a further period of growth in visitor numbers is expected. Indeed, the UK’s tourist authority, VisitBritain, projects 43.4 million tourists to visit this year. Although its forecasts have tended to overestimate demand in recent years, if this projection proves accurate, this would push visitor numbers 6.2% above 2019 levels.

While this would be an impressive increase in numbers on last year, what is more important for us economists is the spending associated with tourism. In nominal terms, the ONS estimates that tourist expenditure equalled £31.0 billion in 2024, while VisitBritain forecasts that it will rise to £33.7 billion this year. This would represent an 18.5% rise above pre-pandemic levels.

Figure 1 – Real expenditure of inbound visitors, 2025 prices

Source: Office for National Statistics, VisitBritain, Cebr analysis

However, after accounting for the inflationary pressures of recent years, 2025’s expected expenditure would still fall short. In real terms, VisitBritain’s spending forecast is down by 7.5% relative to 2019, equivalent to a £2.7 billion gap in tourist activity in today’s prices. Taken together, the data suggest that tourists are expected to spend less per visit in real terms in 2025 than in any other year over the past decade, with the exception of 2020.

Why has tourism spending in the UK failed to make the full recovery after all these years? A driving factor that must be considered is the global economic context. With the notable exception of the US, growth in many inbound markets has been sluggish, particularly from developed economies. From this already weak base,growth prospects have recently been affected by further headwinds in the form of ongoing trade uncertainties and rising geopolitical tensions. Consumer confidence is also weak in key regions for the UK, such as the US, EU, and China.

Another key factor is price competitiveness. Based on the average readings across 2025 thus far, prices have grown in the UK by 26.6% since 2019. This is higher than all the aforementioned markets, which has made the United Kingdom comparatively less attractive as a holiday destination on the international stage.

These relatively higher costs are being compounded by the exchange rate. The pound has strengthened notably against the dollar over the past six months and remains considerably stronger against the euro compared to 2019. This combination of elevated prices and a stronger domestic currency has eroded the purchasing power of visitors.

While these factors are largely external, domestic policy choices are also playing a role. As highlighted in a previous Forecasting Eye and extensive Cebr research, the removal of VAT-free shopping has made the UK less attractive to high-spending international visitors, many of whom are now opting for destinations like Paris and Milan, where such tax refunds remain commonplace.

The recent expansion of Electronic Travel Authorisations (ETAs) to European visitors and the rise in Air Passenger Duty has increased the cost and complexity of travelling to the UK. While the ETA fee may seem minor, it is proportionally more significant for short-haul European travellers and adds an additional layer of bureaucracy. Meanwhile, higher Air Passenger Duty will particularly affect long-haul visitors.

In the current fiscal environment, it is not surprising that spending cuts have reached the tourism sector. VisitBritain saw its budget cut by over 40% for 2025-26, which will likely limit the organisation’s ability to stimulate tourism demand through marketing efforts. This cut may of course be a consequence of the recent shortfall in tourism activity.

It is also a risk to the outlook, rather than an explanatory factor behind the recent data. Away from spending, the government has admittedly provided some policy support to the sector, notably by announcing permanent business rates relief for consumer-facing firms. It remains to be seen whether such efforts are passed down to end customers, however.

The government has strong ambitions in this space, aiming for 50 million annual visitors by 2030. While ongoing issues surrounding tourism in neighbouring destinations could help the UK attract more travellers, current spending patterns suggest that meeting this ambitious target would result in only a 6.5% increase in real-terms expenditure compared to pre-pandemic levels – equal to just half the projected growth of the UK economy over the same period. 

If spend per visitor returned to 2019 levels, the uplift would be more than triple that, at 22.4%. Simply put, volume alone won’t be enough. Reviving the value of each visit is key to unlocking tourism’s full economic potential.

Cebr’s next Forecasting Eye will be released on 18th July.

Contact: Charlie Cornes, Senior Economist, ccornes@cebr.com, 020 7324 2841

Cebr is an independent London-based economic consultancy specialising in economic impact assessment, macroeconomic forecasting and thought leadership.