Everyone is being affected by the threat of global recession, inflation and fluctuating exchange rates. Even the mighty British Pound is taking a bit of a pummelling in some markets, which is bad news for retirees living abroad and trying to benefit from the once favourable exchange rates. Since the adverse taxation of the 60s, when Sean Connery moved to Spain to benefit from lower taxes, UK citizens have thought fit to move their wealth to other European countries, especially the Mediterranean ones. Many Brits retire to Spain in particular, for the climate as well as the financial gains accrued from a strong Pound, but as the Euro has gradually strengthened over the course of the last year, these gains have gotten considerably smaller. The situation is such that some couples are even thinking of moving back to the UK.
According to an article by Simon Atkinson for BBC news, roughly 375,000 UK expats have retired to Europe, and an increasing number have to tighten their belts as the Pound loses value to the Euro. State pensions are now worth between £50 and £80 less a month than they were this time last year. That may not seem like much, but when you consider how far the Pound goes in the UK, and its relative value in Euros, the difference is more significant.
Another important factor to consider is the rising cost of living all across the world. The cost of an average weekly shopping trip has gone up by as much as 100% in some countries. For people who rely on a dwindling foreign income, the costs are even greater.
In Spain, as in the rest of the world, the property market is also feeling the pinch. Some UK citizens living in Spain, who want to sell up and move back, can’t because no one can afford to replace them. Some houses have been on the market for over a year, and despite considerable price cuts, as well as a willingness to negotiate, no sales have been forthcoming.
Mick Roscoe, a realtor who works in Spain, says that many estate agents have gone out of business, but the problem is not a stagnant property market. Roscoe says that the sales volume for this year is about the same as it was last year; the difference is that only cheap properties are being sold, and it’s much more difficult to find credible buyers. An additional problem is that, with a recession looming, banks are reluctant to take chances with debtors and are cutting back on the number of loans they issue.
While UK expats have had to tighten their belts and cut back on luxuries, many are still quite content to stay exactly where they are. Two expats from the UK living in Spain, Eric and Viola Summers, say that the quality of life is much better in Spain. If they had stayed in the UK they would have had to live on benefits, but in Spain they can afford a nice house, and can take pleasure in many other little joys, such as going out for coffee every morning and attending many of the concerts and shows in their area. And of course, there is the sunshine.