A survey by Moneycorp, the UK based foreign exchange specialist, has revealed that the weakening pound is causing many British expatriates to consider moving overseas. Expats living in Spain have been most affected by the falling value of Sterling. 79% of expatriates in Spain felt that their spending power had been reduced. The situation in Spain is similar for expatriates in France, Germany and Italy.
The value of sterling against the Euro has been steadily falling for the past few years. The Euro and the Pound are now almost 1 for 1, compared to €1.5 euros to £1 in 2007. This factor is contributing to the rise of the ‘ex-expat’.
Other reasons for repatriation apart from the weak pound include fears for job security, rising costs of living abroad and falling values for overseas properties. In particular, prices for costal properties in Spain have dramatically dropped. Many expat dreams are being ended due to these reasons with many individuals and families reluctantly being forced to return home to the UK.
The survey was conducted by market research agency Vanson Bourne during the recession in October and November 2009. Over 500 British expatriates were surveyed. Half of the expatriates lived in Europe and the other half lived in the Commonwealth countries of Canada, Australia and New Zealand.
Other surveys, including research from Knight Franc and the Institute for Public Policy Research, state similar findings. House prices in Australia increased by 6.2% last year, causing further difficulties for people moving to Australia. The Institute predicts that the trend of people returning home will continue in the near future as more jobs are lost and life overseas becomes more difficult.
The situation was worsened for many on Tuesday 16th March this year when the European Court of Human Rights ruled against increasing expatriate pensions in line with inflation for people living in non-EU countries. The appeal was lodged earlier this year by a group of UK pensioners who believe that the present system is unfair. Currently, only retired expatriates living in the European Economic Area or a country which has a reciprocal pension arrangement with the UK such as Jamaica and the USA, are entitled to indexed pensions. This ruling will affect over half a million overseas pensioners around the world and may lead to hardship for many people.
It’s not all doom and gloom however! Expatriates in Australia and New Zealand are not as adversely affected as expats in Europe, despite the recent increase in Australian house prices. Only 23% of émigrés in Australia and 24% in New Zealand stated that they felt that their spending power had been reduced.