David Prosser: When the sun finally stopped shining

Outlook During the recession, holiday companies told us Britons were so wedded to their vacations they would give up almost every other item of disposable spending before cancelling their summer breaks. For a time, that optimism proved to be well-founded – for even when retailers such as Woolworths were going under at the hands of plummeting consumer spending, travel companies continued to report decent trading.

That this industry is now succumbing to economic malaise – see the dismal news from Holiday4UK and Thomas Cook yesterday, for example – therefore underlines how seriously household incomes are being squeezed.

However, it also reflects an unwillingness to confront the realities of the economy in many parts of the holidays business. Thomas Cook, for instance, has been on the expansion trail at a time when you might have expected it to batten down the hatches and reduce debts. Tour operators have been slower than airlines to strip out capacity. And prices have had to be slashed to compensate.

There will be more casualties in the months ahead.