Prices in Malta and Cyprus could rise by more than a third now they are in the eurozone according to an article by Charles Starmer-Smith which appeared in the British national newspaper, The Telegraph, yesterday:

"Prices in Malta and Cyprus are likely to rise as a result of the two countries' adoption of the euro, say currency experts. Cyprus and Malta joined the eurozone last week

Last week the eurozone - the European countries that use the euro - increased to 15 members as the two Mediterranean islands, popular destinations for Telegraph readers, joined the common currency group.

Costs for holidaymakers in Malta and Cyprus, which until now have been based respectively on the Maltese lira and Cypriot pound, have historically been lower than in eurozone countries such as France and Spain. According to price comparisons researched by the Post Office, prior to entry into the eurozone both countries were cheaper for goods ranging from coffee and beer to stamps and evening meals. Only Portugal proved cheaper (see table).

But the two islands could find themselves among Europe's most expensive destinations if the switch to the euro follows the pattern of 2002, when prices in most of the first 12 countries to form the eurozone shot up.

Research conducted by American Express between 2001 and 2002 (using data provided by national tourist offices) indicated that, before joining the EU, Spain and Greece were the cheapest of Europe's major holiday destinations, and Italy was the most expensive. Months after adoption of the euro, the research showed, costs of basic holiday items in Greece, Italy, France and Spain rose by an average of 36 per cent. Only in Portugal did euro prices stay more or less in line with the local currency.

Prices in Portugal still remain the best value for Britons and Italy is now one of the more reasonably priced destinations. But Spain, once the bargain basement of Europe, has become one the most expensive eurozone countries to visit. As Nick Trend reports in Savvy Traveller, Britons are likely to face higher prices in European destinations this year as the pound falls further in value against the euro.

A recent YouGov survey showed that nearly three quarters of British travellers were unaware that Cyprus and Malta had joined the eurozone this month.

Holidaymakers will be able to exchange Maltese lira and Cypriot pounds for sterling using the Post Office's buy-back service until January 30. After that point, anyone wanting to exchange old Maltese and Cypriot notes will need to contact the central bank of these countries."