Visits to the UK by overseas residents dropped by five per cent in the last quarter (from April to June 2008), while the number of residents traveling abroad fell by one per cent.

The recent figures, released by the Office for National Statistics, show that the number of visits from overseas have decreased from 8.5 million to 8.1 million during the three months and the number of UK residents traveling aboard fell to 17.7 million.

The decline has been attributed to more overseas travelers choosing to holiday in cheaper destinations, rather than the UK, due to the credit crunch.

The report follows a survey, carried out by TripAdvisor, in July 2008, which found that 41 per cent of people worldwide said that rising prices and fuel costs affected their travel plans this summer, while only 21 percent of Britons changed their travel plans.

Spending by overseas residents on visits to the UK have remained broadly the same at £4.1bn, but spending by UK residents abroad has decreased by two per cent to £9.1bn.

A spokesperson for UKInbound, said: "The latest results complete a disappointing half year for inbound tourism. There can be no doubt that the combined effects of economic uncertainty, unfavourable exchange rates, high oil prices and the increasing cost of food is seriously eroding consumer confidence in many of our key markets.

"The recent cuts at VisitBritain and the impact this will inevitably have on overseas marketing of the UK, will mean little opportunity to improve prospects for the remainder of the year."

During the 12 months to June 2008, the number of UK visits by overseas residents has decreased by three per cent. Visits from European residents dropped by two per cent and from North America by eight per cent. While UK residents visiting overseas increased by one per cent.