The Office for National Statistics said on Thursday that overseas visitors to the UK have dropped by 5 percent on quarter, seasonally adjusted, in the three months to June, hitting the tourism industry, who are struggling with economic slowdown. In the year to June visitor numbers were 3 percent below the corresponding 2007 period.

The biggest drop has been in visits from North America, down 8 percent on an annual basis. However, that’s not surprising considering the slide in the dollar has cut Americans spending power abroad. But this is a blow to tour operators and retailers, since US visitors tend to be the biggest spenders.

Most alarming is the sudden drop in visitors from European countries – down 6 percent in the three months to June against the same period in 2007 – even though the currency’s strength ought to make the UK a more attractive destination.

Stephen Dowd, chief executive of UKinbound, the industry organisation blamed the drop in visitors on tightening the purse strings, “people in Europe are now starting to get worried about their own economies.” He said that long-haul tourism was also “struggling very badly”, but arrivals from France, Germany, Italy and Finland had all dropped in the last month or so.

However, there may be a silver lining for the tourism business in the UK, if British families choose to save money by holidaying at home this summer. But hotels and restaurants are the worst performers in the service sector, according to latest official data showing output contracted 1.2 percent quarter on quarter in the three months to May.

UKinbound’s latest monthly survey gives little hope of visitor numbers recovering over the peak summer season. It fund that forward bookings were nearly 10 percent lower that a year earlier in May, and 6.4 percent lower in June.

“Tour operators are having to sell at a discount, and if you add inflation into that it’s ridiculous,” Mr Dowd said.

The only area of which arrivals are still growing strongly is eastern and central Europe, largely due to people visiting relatives and friends who are now working in the UK.