If you're hoping to get more bang for your buck on your 2025 holiday, consider booking a trip just a three-hour flight away from the UK where you can escape the cost of living crisis and enjoy a £2 beer. It's no secret that the Algarve, the Portuguese hotspot, renowned for its quaint fishing villages and sandy coves, is a favourite for sun-starved Brits. But this year the holiday destination has had a come back, topping the Post Office's global holiday costs barometer for the first time in nearly a decade.

In Albufeira, a three-course meal for two with wine will set you back around £40 – a mere third of what you'd pay for dinner in New York (£128). And a bottle of local beer is a steal at just £2.12. While Portugal has previously struggled to compete with the cheapest long-haul destinations, the Algarve continues to offer affordable food and drink – with prices dropping 1.6% since last year, even as costs rise elsewhere.

The strength of the pound against the euro also bodes well for British tourists, who can expect to get almost £30 more on a £500 currency purchase compared to two years ago. Tavira – a charming working harbour in the east – is a favourite among visitors: it ranked in the top five in our survey of the best seaside and beach towns in the Mediterranean.

The town, which sits on the Gilão River, is the region's most historic, with cobbled lanes lined with seafood restaurants and boutiques. Lagos is another must-visit, boasting well-preserved plazas and mosaic-tiled pavements nestled within medieval city walls.

And let's not forget the stunning beaches – from vast stretches of golden sand, to the secluded Praia do Camilo nestled between two towering cliffs. Indulge in fresh emperor fish and snapper, caught daily and filleted at your table for a steal. According to Skyscanner data, flights start from a mere £31. May is the most affordable month to fly, with pleasant daily highs of 22°C.

A three or four-star hotel in Tavira averages £127 per night, according to Kayak data, or £147 in Lagos. In the rustic town of Sagres, nestled in the rugged southwest coastline, you'll feel worlds away. Sagres provides an excellent base to explore a less commercial side of the Algarve. If you stay at Pousadas de Sagres, a traditional hotel perched on dramatic cliffs, you'll be treated to stunning sea views.

With its beaches and winds, Sagres is also a top surfing destination. Visiting the harbour allows you to take in the Sagres Fortress and the Cape St. Vincent lighthouse at Sagres Point – ideal spots to soak up the breathtaking views and walk off the delicious Portuguese cuisine.

This infamous stretch of land and sea is steeped in history, having been frequently raided by pirates, including Sir Francis Drake. From here you can also make the 35-minute trip to Lagos.