There are costs to glorious isolation

By Bagehot

DAVID Cameron gave a speech today about gingering up British tourism. It was full of all manner of sensible stuff about the importance of the tourist industry. It is Britain's third highest export earner after chemicals and financial services, he noted, and employs almost 10% of the British workforce.

In keeping with his coalition's new focus on drumming up new business in emerging economies, there was an interesting but sadly incomplete passage about Britain's feeble record at attracting tourists from China, a fast-growing market that is in the cross-hairs for every tourism minister and promotion body in the world. As the prime minister put it:

Huge opportunities are being missed. The UK has fallen from sixth to eleventh place in the World Economic Forum's Travel and Tourism Competitiveness Ratings between 2008 and 2009.

I want to see us in the top five destinations in the world. But that means being much more competitive internationally. Take Chinese tourists, for example.

We're their 22nd most popular destination. But Germany is forecast to break into their top ten. Why can't we?

Currently we only have 0.5 per cent of the market share of Chinese tourists. If we could increase that to just 2.5 per cent this could add over half a billion pounds of spending to our economy and some sources suggest this could mean as many as 10,000 new jobs.

Mr Cameron had a long list of solutions. He called for more promotion of British heritage (after Labour's "cool Britannia" focus on modernity). He wants to decentralise tourist promotion to give more power and smarter incentives to local bodies (that'll be the Big Society, tick). He thinks more tourists would come if Britain offered faster trains, quicker customs clearance at Heathrow and speedier delivery of visas via online applications.

Those suggestions are all fine, as far as they go. Except that there is another, much more important, reason for Britain's feeble performance as a tourist destination for China's new middle classes. But Mr Cameron could not bring himself to mention it.

By pure coincidence I was recently talking to a boss at one of the largest Chinese travel agencies in Europe, and he brought up Britain's low figures. "Britain should be really successful, it is very attractive to Chinese tourists," he told me. The problem, he said was that Britain had decided to stay out of the European Union's borderless Schengen area. Chinese tourists heading to continental Europe only need a single Schengen visa to travel freely within 25 countries (22 EU members plus Switzerland, Norway and Iceland). Schengen visas were already pretty fiddly, he said. If his tourists wanted to add Britain to their tour of Europe, they needed to apply for a separate British visa, and that was another whole layer of expense and inconvenience.

Take Switzerland, my friendly tour operator said. It never used to be that popular, but once it joined the Schengen Area in 2008, it really took off as a stop on Chinese tours: hordes of free-spending tourists now popped there to admire the lakes, mountains and to buy themselves Swiss watches. "If Britain followed Switzerland into the Schengen system, I reckon half the Chinese tourists on the continent would go to the UK," he said. It was not the first time I had heard this, either.

Now, British readers may well feel that tourism promotion is a poor reason for joining the Schengen area. They may argue strongly that the benefit of maintaining separate border controls at British ports and airports outweighs the appeal of luring a few hundred thousand Chinese tourists to these isles (though the French government recently announced that Chinese visitors now topped the tourist league tables as the biggest spenders, by nationality).

But given that travel agents name Britain's non-membership of Schengen as the biggest reason—by far—for the country's failure to attract Chinese tourists, it is at least odd that Mr Cameron failed to mention it, no? Well, no, it is not odd at all. The EU is a toxic subject for the prime minister and his coalition. So stand by for any number of odd speeches that dance around the costs of Britain's glorious isolation.