* Rise in staycations after plunge in the pound
* Higher inflation hits spending power
* Airlines cutting prices to lure bookings
* Luxury groups, domestic tourism enjoying a boom
* GRAPHIC-Brexit belt tightening http://tmsnrt.rs/2pa2fpd
By Kate Holton and William SchombergNEWTON FERRERS, England/LONDON, April 21 (Reuters) - Before
last year's Brexit vote, Scott McCready was struggling to fill
his holiday cabins on the coast of southwest England. Now the
site is fully booked with British tourists avoiding more
expensive foreign trips following a plunge in the pound.
This turnaround in the 10 months since Britons decided to
leave the European Union reflects a jump in demand for
"staycations", with British consumers seeking ways to make their
money go further as rising inflation squeezes their incomes.
McCready, who gave up a job in IT to build his site between
ancient woodlands and a creek in the county of Devon, recalled
the hectic days after last June's referendum.
"My phone just took off," he told Reuters. "It was like
someone flicked a switch. We were booked out for the rest of the
summer and now this year we're having to turn people away."
The reason why Britons and some Europeans have flocked to
his 24 wooden lodges in Newton Ferrers, once a quiet fishing
village 370 km (230 miles) from London, is straightforward.
The referendum result caught financial markets off guard,
sending the pound down about 20 percent against the dollar and
16 percent against the euro at one point. That rapidly pushed up
the cost of holidays to the United States and continental
Europe, both popular destinations for Britons.
Since then, sterling has recovered some of its losses but
remains down about 14 percent against the dollar and 8 percent
against the euro.
So about 15 km away, Chris Duff is enjoying a similar jump
in demand at his 90-lodge Thatches park, where he is investing
to upgrade facilities which include a swimming pool and a
fitness suite. "If we could, we would like to expand," he said.
Britain's$2.6 trillion economy surprised almost all
forecasters by withstanding the initial shock of the Brexit
vote, a point made by Prime Minister Theresa May on Tuesday when
she called a snap June 8 election.
"Despite predictions of immediate financial and economic
danger since the referendum we have seen consumer confidence
remain high, record numbers of jobs and economic growth that has
exceeded all expectations," she said.
But the picture for the years ahead looks weaker as
sterling's fall raises import costs. With annual inflation
pushing up towards 3 percent, outstripping sluggish wage growth,
Britons are becoming cautious in their spending - and not just
Retail sales rose at the slowest pace in nearly a decade in
the first three months of 2017, according to the British Retail
Consortium, and surveys have shown that households are
increasingly worried about the outlook for the economy.
German supermarket groups Aldi and Lidl, which attracted new
British shoppers during the global financial crisis due to their
deeply discounted prices, have seen accelerating sales in 2017.
"Customers are voting with their feet," Matthew Barnes,
Aldi's CEO for Britain and Ireland, told Reuters in February.
The squeeze facing many people in Britain is unlikely to be
as sharp as in the years following the 2007-09 financial crisis
when inflation hit 5 percent and annual wage growth was even
weaker than it is now.
Nonetheless, the Bank of England expects almost no growth in
the spending power of households over the next three years. Many
private economists say even this forecast may be too optimistic.
The extent of the hit to consumer spending is the most
important factor behind the central bank's view that the economy
cannot be weaned off its record low interest rates.
"The big story in terms of the strength of the UK economy is
... the strength of consumer demand, and there are some signs of
(that) coming off slowly," Governor Mark Carney said.
STAYING IN UK
Last month, the Bank pointed to rising demand for
staycations as a sign of how consumers are adapting.
According to tourism agency Visit England, 63 percent of
British adults expect to take a holiday or break in England in
2017, up from 57 percent in 2016. More will flock to traditional
destinations in Scotland, Wales and Northern Ireland.
Bookings website Pitchup.com, which specialises in outdoor
holidays, says it has seen a 41 percent jump in UK reservations
from domestic tourists since the referendum, a much stronger
growth rate than in previous years.
Bookings for lodges are nearly tripling and cabins doubling
and to Pitchup.com founder Dan Yates, this suggests that many
holidaymakers want to avoid expense but without resorting to a
tent in Britain's unreliable climate.
"People who are moving from a hotel to a cabin are going to
be paying significantly less. But they still want their
dishwashers, cable TV and iPod docks," he said.
Britons have not suddenly given up foreign travel. Official
figures show an 8 percent increase in the number of UK residents
taking a holiday abroad in the three months to January. But that
pales in comparison with a 22 percent surge in the number of
foreign tourists coming to Britain in the same period.
This data also suggests British holidaymakers are spending
more cautiously while abroad while foreign visitors to Britain
are taking advantage of the weak pound to spend more.
Luxury brand Burberry <BRBY.L> said it had seen a 90 percent
rise in the number of Americans buying in Britain in the six
months to the end of March.
With the outlook for British tourism spending unclear,
Europe's biggest budget airline Ryanair is shifting its future
capacity growth away from the country. The Irish-based carrier
is worried about the impact of Brexit and, like some of its
rivals, is cutting fares to win over customers.
One of the potential winners from the Brexit effect is
Merlin <MERL.L>, the world's second-biggest visitor attractions
group. It expects more tourists to visit its British sites such
as the Madame Tussauds waxworks museum and the London Eye
observation wheel this year.
Merlin CEO Nick Varney sees little likelihood of any change
to the fundamental drivers of the change. He thinks a
pound-to-euro exchange rate of 1.40 is the tipping point for
holidaymakers in Britain and Europe when deciding where to book.
The pound is currently trading at about 1.19 euros, keeping
the economic advantage firmly in favour of Britain.
One man hoping to benefit is Adrian Coppin, who owns the
Mill Park campsite in southwest England where tents can be
pitched for 10 pounds ($13) a night. Having seen a sharp rise in
British bookings he expects an increase in continental European
He now just needs the sun to shine. "If we can now secure
six to eight weeks of glorious weather then this could set the
scene for years to come," he said.
($1 = 0.7800 pounds)
GRAPHIC-Pressure builds on UK household finances http://tmsnrt.rs/2pa2fpd
(editing by Guy Faulconbridge and David Stamp)
((firstname.lastname@example.org; 0044 207 542 8560; Reuters
Keywords: BRITAIN EU/CONSUMERS (ANALYSIS, PIX, GRAPHIC)