Double whammy for British tourists as pound plunges and prices rise abroad

British tourists travelling to the continent this summer will lose hundreds of euros in exchange rates compared with two years ago, as ongoing political turmoil continues to hit sterling.

Holidaymakers buying €1,000 can now expect to pay around £879 after sterling dropped as markets reacted to the result of the snap general election. In July 2015, well before the EU referendum in June last year, British travellers visiting Europe could expect to pay about £700 for €1,000 – a difference of almost £200 in two years.

The weakening value of sterling is a further worry for tourists who are also faced with increased costs for eating out and travel basics, including sun cream and insect repellant, in some of the most popular European holiday destinations.

The value of £1 has not exceeded €1.21 so far this year – well below the pre-EU referendum level of €1.30 and far less than the €1.43 of two years ago. On Friday the pound suffered initial heavy losses during volatile trading as the impact of the inconclusive election rippled through the City.

The best rate of exchange on £1,000 was €1,125, according to moneysavingexpert.com, while the same amount would buy just €978 at one exchange in Heathrow airport.

Simon Phillips, of currency exchange firm No 1 Currency, said sterling’s instability was likely to continue in the near future. “I don’t think we are going to see a flat, easy, forecastable sterling-euro or sterling-dollar figure for some time yet,” he said. “Let’s face it, we have got Brexit negotiations to go through – in whatever form they take – and the markets don’t know what that means. Uncertainty is what breeds exchange-rate variation and there is a load of it.”

The weaker pound comes as prices at some of the most popular tourist areas in Europe have risen sharply over the last five years. A survey by Post Office Travel Money comparing the cost of meals, drinks and holiday essentials found that Palma in Majorca is now almost 25% more expensive than in 2012 and Sorrento in Italy is up 18%. There is some respite for travellers, however, with the survey showing price drops on the Costa del Sol in Spain of 14% and on the Algarve in Portugal of 19%.

An increase in the value of sterling to the levels seen two years ago would not just be about a strengthening pound, according to Phillips, but also about a significant weakening of the euro. “It would not all be about sterling power, it would also be about a euro collapse. We Brits always think of ourselves but the reality is there are two sides to that story. For sterling levels to return you would be looking at both sides of the equation – strong sterling, weak euro.”