Holidaymakers are holding back on booking trips for next summer amid mounting fears that Chancellor Rachel Reeves will unleash tax rises in November’s Budget, the boss of On The Beach has warned.
Shaun Morton, chief executive of the Manchester-based travel group, said speculation over a raid on household incomes was already weighing on consumer confidence and curbing demand in the “early bird” booking window.
“The speculation around all of the different places where the Exchequer could go to raise funds is causing uncertainty across the population,” Morton said. “Events like the Budget make a difference. If you think something might impact you, you’ll be more cautious about long-term commitments.”
Shares in On The Beach tumbled 20 per cent last week after the company revealed that summer 2026 bookings had so far been hit by a “later booking trend”, leaving revenues below expectations for the financial year ending Tuesday.
Morton said customers appeared rattled by the prospect that Reeves might break her pre-election pledge not to raise income tax. “The commitment was that certain taxes wouldn’t be raised, which maybe gave people some comfort, and now it feels like that might change,” he said.
Despite the weaker appetite for early commitments, he stressed that when customers do book, they are still spending just as much on their trips. Bookings for this summer rose 12 per cent, outpacing the 3 per cent average increase across the wider UK package holiday market, while sales of winter breaks were also up 12 per cent after last year’s record season.
On The Beach hopes its push into cheaper city breaks and flexible payment options will provide a buffer if household budgets come under further pressure. But Morton warned that any tax raid would inevitably squeeze consumer spending power.
“Whatever the mechanic that is brought in to raise income, anything that reduces people’s disposable income is going to affect consumer businesses,” he said. “Whether you take money out of people’s pockets indirectly or directly — VAT, employer’s national insurance or PAYE — it will come from somewhere and it’s going to impact your average working person.”