Amended UK Quarantine Rules Cause Travel Stocks To Drag Down Europe

Britain has added more European countries to its quarantine list, meaning people will have to isolate for two weeks having visited them. The UK is now including France, Malta and the Netherlands to this growing list.

Investment Director at AJ Bell, Russ Mould, said: “The decision will feel particularly painful as it comes at the height of the UK holiday season and the question now becomes just how long the likes of EasyJet and Ryanair can continue under these conditions.”

EasyJet

EasyJet has announced that they will be continuing to operate a complete schedule despite the recent changes to quarantine rules. Their customers are able to switch their flights free of charge if they decide not to go abroad at this time.

Adding France to the list of quarantine countries is going to put the travel and leisure industry under huge pressure, with half a million Brits thought to be visiting France at this time. Shares in French travel companies have already begun to fall, for example, Air France-KLM, which has fallen by 3%.

As Neil Wilson of Markets.com points out, this decision will also batter the confidence of Brits who are looking to book holidays:

“Apart from the immediate damage this will do at the height of the school holidays and peak summer season, the quarantine decision also underlines the inherent risk you take in booking a holiday abroad right now, which will do nothing for consumer confidence.”

STOXX 600

Due to this, stocks have taken a huge hit, causing European shares to fall last week. The pan-European STOXX 600 had fallen by 0.8% by 7:13 GMT. UK-based airlines such as EasyJet, IAG and TUI have fallen up to 5.5%, while travel and leisure stocks have also fallen by 2.1%.

This latest dip as the UK enters a recession plays out against a global backdrop of economic uncertainty. While people had high hopes for China, their latest data for retail sales has proven disappointing, causing economists to doubt the speed of the world recovering economically.

Their sales showed evidence of a shocking decrease last month. The recovery of factories looks to be struggling to pick up the pace, with their outputs increasing by just 4.8% in comparison with the previous year. China’s retail sales have now been looking to decrease for seven consecutive months.