If the United States falls over the "fiscal cliff," it will lead to a loss of $20 billion in business travel spending over the next nine quarters, according to the Global Business Travel Association (GBTA), which yesterday released a new report on the impact of the fiscal cliff — a nightmare scenario resulting from the simultaneous expiration of several laws on Jan. 1, 2013, the result of which would be mass tax increases and automatic spending cuts that could send the U.S. economy into a second recession — on business travel.For a recap of last week's top stories, check out MeetingNews Minute:
In its report, GBTA presents two potential scenarios. In the first, the fiscal cliff occurs, leading to a 2.5 percent decline in business travel spending and a reduction of 32 million business trips over the next 27 months. However, the elimination of tax cuts and reductions in federal spending would lead to reduced deficits and lower interest rates that would stimulate economic growth and business travel spending in the long term.
In GBTA's second scenario, no fiscal cliff occurs. In that case, it predicts, business travel spending and volume would grow more quickly in the short term, leading to a cumulative loss of only 300,000 business trips and a gain of $5.5 billion in total business travel spending over the next nine quarters. Longer term, however, larger budget deficits and growing debt will stunt further growth.
"Given business travel's indispensable role in spurring economic growth, these findings dramatically illustrate the potential impact of the fiscal cliff on the overall economy," said Joseph Bates, vice president of research at the GBTA Foundation. "Falling over the cliff would set back the clock substantially for business travel and every other sector of the economy in the near term."
Added GBTA Executive Director and COO Michael W. McCormick, "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."