Are prices set to rocket for holidaymakers in Malta and Cyprus – the newest members of the eurozone?
The eurozone got bigger this week as two of the most popular destinations – Malta and Cyprus – joined Europe’s currency club. But, if history repeats itself, this could prove bad news for UK holidaymakers, according to Post Office® Travel Services.
Costs for holidaymakers in Malta and Cyprus are currently lower than in eurozone countries like France and Spain, based on the Maltese lira and Cypriot pound. However, if prices rocket as they did in Spain and Greece when the first 12 countries switched to the euro six years ago, the two islands could become Europe’s most expensive resorts. This is one of the key predictions made in the new Holiday Money End of Year Report, which will be published by the Post Office® next week.
Before the 2002 changeover, Spain and Greece were the cheapest of Europe’s major holiday resorts – places where eating and drinking cost a fraction of the UK price. By contrast, Italy was, invariably, the most expensive. Within months of adopting the euro, prices had rocketed in Greece and almost doubled in Spain. Only in Portugal did euro prices stay more or less in line with the Portuguese escudo rates.
Six years on, research by the Post Office® for its 2007 Holiday Costs Barometer shows that euro prices have settled down in Greece. Portugal remains best value and Italy is now established as one of the more reasonable destinations for living expenses. However Spain, once the bargain basement of Europe, is now the most expensive.
Cyprus and Malta currently sit in the middle of the Post Office’s Holiday Costs Barometer of 10 items regularly purchased by UK holidaymakers in third and fourth places. However, if the switchover to the euro follows the 2002 pattern, prices could rise by over one third³, making Cyprus and Malta more expensive than Spain.
Post Office® bureaux de change branches will no longer sell Maltese lira or Cypriot pounds. However, customers will be able to exchange these currencies for sterling using the Post Office®’s buy back service until 30 January 2008. After that point, anyone wanting to exchange old Maltese and Cypriot notes will need to contact the central bank of these countries.
