ALISON CAMPSIE and HANNAH GIVEN Summer holidays: a time to relax, feel the sun on your back and leave all those everyday worries at home. But this year be prepared for a little black cloud to cast a shadow over your great escape.

ALISON CAMPSIE and HANNAH GIVEN

Summer holidays: a time to relax, feel the sun on your back and leave all those everyday worries at home. But this year be prepared for a little black cloud to cast a shadow over your great escape.

For that economic gloomy spell which is playing havoc around the world is, unfortunately, set to follow you to your favourite European holiday destination, too.

More Britons take their holidays on the Continent than anywhere else due to short journey times and relatively cheap living costs, but with the price of the euro at its highest since it was launched in January 1999, tourists are set to see prices soar for key everyday goods purchased on holiday.

Sun seekers could be faced with an increase in their spending budgets by 10% to 15% to cover their living expenses in Europe. This week the price of one euro peaked at 80p, a rise of 12p on the same month last year, with no indication that the European Central Bank is to induce a cut in interest rates to even out the value of the currency.

One couple who are acutely aware of the rising costs of spending time on the continent are Kit and Bob Stephen, from Hamilton, Lanarkshire. They have spent 24 years in a row visiting Playa de Luz on the Algarve in Portugal and now live in their villa for four or five months over the winter.

Mrs Stephen, 74, a retired accountant, said: "If you are earning and living on euros it is not so bad, but for expats like ourselves the exchange rates coupled with inflation have put a fairly substantial increase on the cost of living. You are getting 10 to 11% less euros for your pound, and that has an impact on your budget. If you are converting pounds or transferring funds from Britain to live on, it does add up.

"I have noticed that the price of food has risen considerably; I would say the price of a cup of coffee is a good indicator of the way things are going, and that has risen, I would say, at least 100% in the past five years."

However, it is money well spent for the couple.

Mrs Stephen said: "Of course I am not happy about having to pay more to be there, but weather-wise, people-wise and for the general ambience, it is very much worth it."

While the pinch is being felt in the pockets of holidaymakers, tourist destinations are keen to play down the effect of the booming euro.

Earlier this year, Luc Chatel, the French tourism minister, said that a record 80 million people visited the country in 2007, with more expected this year and no evidence that the strong euro was putting off tourists. The country is now on a mission to become the richest country in the EU when it comes to tourist receipts.

And Giuseppe Impellizzeri, deputy director of the Italian Tourist Board, said yesterday: "The euro exchange rates have an influence on all markets, and in particular the tourist market, but the concept is that there are important elements at play here which can counterbalance those negative effects.

"The market is essentially stronger than the crisis in the economy. We can balance off the negative effects of the exchange rate by the increase in various tourist groups. There is a rise in the numbers of older travellers to Italy, who travel without their children and who have good budgets for their trips. Also, wealthy young singles favour Italy and economic pressures may not be such a concern to these individuals."

Mr Impellizzeri added that the demand for luxury travel, including cruises, to Italy was growing, but that low cost airlines had also helped to keep tourist numbers high.

"A trip to Italy is like a personal renaissance for many and the richness of the experience is not always measured in the money that it cost," he said.

He added that some may chose to shorten their holidays or spend less as a result of the strong euro, but it was not expected to make a large dent on the financial wellbeing of the industry.

While Brits may face the higher cost of holidaying in Europe, experts predict that the weak dollar may pose a greater threat to the market.

Americans spent $3.8bn (£1.92bn) on travel-related services in Europe in the first quarter of this year, a revenue which could be at risk given economic turmoil in the United States.

Tom Jenkins, executive director of European Tour Operators Association, said: "That the euro is strong doesn't worry us much.

"The real threat is that Americans are less likely to travel to Britain and other European countries given the low value of their currency, and that tourists from other long-haul destinations, such as Asia, are likely to visit the United States to take advantage of the cheap dollar."

"It's a double whammy for countries like Scotland," he said. "People do budget for their holidays and a more expensive euro could make a difference for them.

"But overall is everyone going to stop going to, say Tenerife, and take their holidays in Skegness instead? I don't think that is going to happen when more and more people expect to take their holidays abroad."

He added that, while Brits heading to Europe may experience higher costs, the UK could see the benefit from an increased number of visitors from Europe.

"There is still strength in demand from European markets. It is comparatively cheap for a European to spend their holidays in Britain," he said.

VisitScotland also acknowledged that the economic pressures in the market could benefit the industry in this country.

A spokeswoman said: "Generally, at the moment it's very favourable in terms of European visitors getting good value for money. But we are not putting all our eggs in one basket and have been working hard on marketing the appeal to emerging markets such as Russia, India and China."