Be afraid, but not too afraid

By B.R.

GREECE is moving steadily closer to leaving the euro, it seems. The country’s financial woes should, on the face of it, be good news for the places with which it competes for tourists. Last week, the British government advised travellers to stock up with all the cash they might need before travelling to Greece. Pictures of long queues outside cashpoints and worries about the reliability of hospitals, airports and the like are, no doubt, making visitors consider alternatives such as Spain and Italy.

Indeed, competitors could reap a double benefit from the trouble on the euro zone's south-east tip. Not only will tourists re-route from the Aegean to the Mediterranean, but the crisis has helped push the value of the euro down, meaning that such places are also more attractive to holidaymakers from outside the euro zone.

For Greece, a collapse in tourism receipts will be devastating. The country relies heavily on attracting foreigners to its beaches and historic sites. Travel and tourism contributed a total of €28.3 billion ($31.3 billion) to the economy in 2013—or 16.3% of GDP. With summer bookings so vital, the likely conclusion of the crisis in early July could not have been timed worse.

For all that, however, competing countries would do well not to be too bullish. The immediate economic impact of dropping out of the euro zone would no doubt be more misery. But a return to the drachma, which will undoubtedly be devalued, will make Greece cheaper than its competitors in the medium term. Hoteliers and restaurateurs might prefer to be trading in the single currency but, assuming they can hold on for a few years, the alternative may not as cataclysmic as they fear.