GBTA Forecasts Fiscal Cliff’s Potential Threat to Business Travel
Think expense management is already a hassle? It’s about to get tougher. While Washington works to avert the consequences of plummeting over the “fiscal cliff” as of January 1, the Global Business Travel Association (GBTA) has released a report stating the potential ramifications such an event would have on business travel. Tax cut expirations and immediate spending reductions are expected to have fairly dire consequences for the travel industry in 2013, should Washington fail to reach an agreement to prevent some of the fallout.
If the fiscal cliff scenario occurs, GBTA’s forecasters predict there would be a loss of $20 billion in business travel spending over the next two years, resulting in 32 million fewer business trips. Obviously, this would be a fairly devastating event for a travel industry that is still trying to recover its footing from our most recent recession. If the fiscal cliff is averted, the lower tax rates and continued government spending is projected to increase business travel spend by $5.5 billion over the next two years, with an estimated loss of approximately 300,000 business trips.
However, if the federal government continues on its path of deficit spending, the escalation of debt and inflation is expected to take a toll on travel spend over the long term. If Washington fails to reach an agreement and the fiscal cliff scenario is allowed to occur on January 1, GBTA has said “the elimination of tax cuts and reductions in federal spending would lead to reduced deficits and lower interest rates over the long run, resulting in business travel spending and an overall economy that grows more quickly after absorbing the shock of the fiscal cliff.”
In response to the forecast, GBTA’s executive director Michael W. McCormick said, “This research shows that we must seriously consider both the near-term ramifications of the fiscal cliff and the long-term implications of expanding government debt. Either way, the fiscal cliff is a wake-up call for leaders looking to craft smart economic policy going forward.”
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