Friends of the Earth on British tourism

By Anthony Batty | 5 August 2005

Today we see some economic illiteracy from Friends of the Earth, and who put forward an argument that if taken to heart would suggest the closing down of all British airports outside of London. In their report, Why airport expansion is bad for regional economies, they assert that the North East, for example, in 2004:

earned £177 million from overseas visitors... but North East residents flying abroad spent £938 million

carrying on:

all regions except London ran a huge economic deficit from aviation

This report obviously neglects specialization. Why should everywhere in Britain, or indeed in the world, specialize in tourism? The North East does have some beautiful countryside, but let's face it, it does not have the brilliant sunsets of the Balearic Islands, the skiing resorts of the Alps or the Coral Reefs of Australia. In return, however, other products are produced and exported. It is to be expected that the UK has a net deficit in some areas (tourism for example), but in return it will runs a surplus in other areas - Lloyds of London is the leading specialist insurance market in the world.

When British citizens pay for goods abroad, they exchange pounds sterling for foreign currencies. That gives other people pounds that they can't use anywhere else but in Britain. Rather than burning £50 notes or putting them under the mattress, they either buy British goods and services, invest in the British economy, or sell them to someone who wants to do one of these things. If we started forcing people to buy British, for example through exchange controls, our economy would suffer.

Why Friends of the Earth are happy for money to be spent in the UK but not abroad is curious. We do not worry about the trade balances between Manchester and Sheffield. Why then does it become an issue when one of the parties is foreign?

Tourism is a good like any other. While we probably could produce all the oranges we wanted in the UK (as we could have all our holidays in the UK), it would not be efficient or desirable to do so - by buying from abroad we can have them at lower cost and with greater variety (possibly with increased quality as well). Using the example of oranges, to produce them here in the UK would require greenhouses and significant amounts of electricity to create a climate in which they could grow. By using the natural advantage of countries like Brazil and Spain, we benefit the environment by using fewer resources. The fact they come from abroad should not concern us. Likewise airport expansion should be dealt with on its own merits, not simply dismissed on spurious "trade deficit" grounds.