School holidays? Looking forward to jetting off with the family for a break in the sun on a Greek island?
You may find that you will be paying a bit more for your Retsina than you originally budgeted.
Firstly, a factor affecting all overseas destinations is the weaker pound since the Brexit vote. The exchange rate of £1 into Euros has fallen from about €1.30 just before the vote to about €1.18 currently. The result is an increase in costs of about 9%. Therefore, a round of drinks costing, say, €10 has increased in sterling terms from £7.70 to £8.48. This increase will affect all of the major European destinations.
However, the cost of holidaying on the Greek islands has suffered a further increase. Until recently, the islands enjoyed an advantageous rate of VAT but this is being gradually withdrawn as part of the package agreed to reduce the Greek government’s budget deficit. In October 2015 this discounted rate was withdrawn on a number of islands, including Naxos, Paros, Skiathos, Mykonos, Santorini and Rhodes. In June of this year, it was withdrawn from a further group of islands, including Milos, Tinos, Alonissos, Antiparos, Skyros, Thassos, Syros and Andros. The remaining islands will lose this privilege next year.
The effect of the withdrawal is to increase the VAT rate on the affected islands from 17% to 23%, and this has been further increased to 24% following an increase in the standard rate of VAT.
So how does this affect that round of drinks? If the cost was €10 before these changes, the increase in VAT will have put the price up to €10.60 now. Before the Brexit vote that cost of €10 would have translated into a sterling cost of £7.70. However, the increased cost in Euros means that the sterling cost of that round is now £8.98, representing an overall increase of over 16.5%.
Bracing Skeggy is perhaps looking a bit more attractive this year!