Shares in globally-focused travel agent Flight Centre Travel Group Ltd (ASX: FLT) have fallen around 5 per cent in morning trade to $29.50 as investors worry about the impact of a potential UK recession on its operations in the country.

The UK has long been a powerbase for Flight Centre as it has expanded its bright-red shop front and online travel services aggressively in the country since 1995. As a result for the six months ending December 31 2015, Flight Centre’s UK operations delivered a record profit in Australian dollars with total transaction value (TTV) topping GBP500 million for the first time ever.

The only real speed bump was the 2009 recession, since then UK earnings have increased at an impressive compounded annual growth rate of 18 per cent. In the most recent reporting period UK TTV was around 12 per cent of group total.

The pound has dropped around 10 per cent versus the Australian dollar since the referendum vote and this is likely to drag down Flight Centre’s Australian dollar earnings when exchanged from UK pounds. Moreover, the potential for an economic slowdown in the UK and Europe could impact consumers’ appetites for overseas holidays in something of a double whammy for Flight Centre’s short-term outlook.

The stock is down around 12 per cent over the past year and the group recently updated the market to expect full year underlying profit before tax to be down 2-5 per cent on financial year 2015. On traditional investing metrics the stock looks cheap, but much will depend on whether it can return to earnings growth in financial year 2017 and it looks a hold to me.

Others that operate only in the online travel space like Webjet Limited (ASX: WEB) have performed much better and how well Flight Centre can adjust to the digital future will have a much larger impact on its long-term performance than recent shocks to the UK economy.

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Motley Fool contributor Tom Richardson owns shares in Webjet.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.