Cheaper travel to UK and Europe likely

Name: Watch: Brexit victory - What happens next?
Uploaded: 2016-06-24T17:22:55+12:00
Duration: 177 s
Description: Britain has voted clearly in favour of leaving the EU. Business Editor at Large Liam Dann speaks to Labour MP David Shearer and Auckland University Professor Jennifer Curtin about what happens next.

By Staff reporters

NZ Herald·

24 Jun, 2016 05:00 PM3 mins to read

Britain has voted clearly in favour of leaving the EU. Business Editor at Large Liam Dann speaks to Labour MP David Shearer and Auckland University Professor Jennifer Curtin about what happens next.

Plunging pound means Kiwis will get more bang for their buck.

Shockwaves from the Brexit vote will stoke economic uncertainty here but New Zealanders stand to gain from possible interest rate cuts and cheaper travel in Britain and Europe.

If Britain's economy is dented as forecast, New Zealand's exports could fall as much as $190 million a year, NZIER economists say.

Last night, Prime Minister John Key sought to reassure New Zealanders that the immediate effects of the vote were likely to be limited.

"We will continue to have a strong relationship with both the EU and the UK, and to further develop our ties with both. In this respect nothing has changed," he said.

"The UK remains a member of the EU for the moment and it will take some time to work through the implications of their decision to leave."

Mr Key said New Zealand remained committed to negotiating a free-trade agreement with the EU, and would work with the UK to "put in place new trading arrangements".

In New Zealand the NZX50 fell by 2.3 per cent and the Australian share market fell by more than 3 per cent.

Westpac senior market analyst Imre Speizer said interest rates could fall in response to a weakened world economy.

But economist Shamubeel Eaqub didn't expect the vote to affect interest rates, as Britain was a small part of New Zealand's export market. He said it might boost migration to NZ.

Herald investment columnist Brian Gaynor said while the country's housing market won't be affected, it was likely interest rates would stay lower for longer.

Kiwi travellers to Britain and Europe will find their dollars go further thanks to the weaker pound and euro.

About 150,000 Kiwis travel to Britain a year and Scott McCullough, head of Travel Money NZ, said the dips could make a difference.

"The UK and Europe is not the cheapest place in the world to go - the more bang for their buck while they're up there the better off they're going to be."

House of Travel commercial director Brent Thomas expected a spike in bookings to Britain and Europe next week.

"They are great [exchange] rates and that will entice people."

Travellers to the United States saw their spending power drop suddenly yesterday, with the New Zealand dollar slipping US4c as investors retreated from riskier currencies.

Tourism here could also be hit, with British visitors having their spending power crimped by the pound plunging to a 31-year low.