The widely-predicted demise of the Euro could herald a return of traditional cheap summer European destinations such as Greece and Spain, according to economists.
Speaking at the ABTA conference, Douglas McWilliams, of the Centre of Economics and Business Research, said Mediterranean countries were likely to revert back to their original currencies should the financial crisis in the eurozone deteriorate even further.
He said: “The euro will definitely break up. Economists are very good at telling you what will happen but very bad at saying when it will happen. So all I can say is that it will definitely happen within five to 10 years.”
“What will happen is that Mediterranean destinations will drop out of the Euro. They should never have joined up in the first place because they hadn’t managed to abolish domestic inflation and when they stayed in they became very uncompetitive,” he added.
“When they come out they will start to be competitive again and will start to structure their economies around tourism again, which is going to be quite important to them.
“Until it breaks up, the Euro will go south,” he said. “We will get a new set of travel destinations re-emerging. I think that the traditional destinations will come back again when they go back to the good old days of using Lira and Drachma.
“It was always clear that the Euro was a political thing. For money to be dominated by politics is always a bad idea.”
“I have told the Greeks their currency will drop by a minimum of 15 per cent but initially the probability is that it will drop by something much bigger than that, by 30 to 50 per cent. After that it will come back up.”
McWilliams also said UK consumers were starting to spend more on travel as the country recovers from the recession.