Currency crisis hits retired UK expats

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By Miles Brignall

IN many ways they are the chosen ones — the generation of Britons who retired to mainland Europe on the back of the big leap in house prices, safe in the knowledge that they had good pensions to keep them in their old age. However, this week all is not well in the villages of France and the coastal resorts of Spain.

The fall of the pound sterling has left many couples’ plans for the good life in tatters. The change has left anyone who lives in the eurozone and relying on UK-based pensions or savings, coming to terms with a dramatic fall in their income. From the sun-drenched Spanish costas, to the wind-lashed Breton coast, Britons who have moved abroad are undoubtedly feeling the pinch.

David and Christine Edwards are typical of many when they say they have suddenly started to feel the effects of the pound’s slide. The pair, who took early retirement and live in a small village near Chateauroux, right in the centre of France, say they have just started growing vegetables — partly in response to seeing their income falling away.

The couple brought their four children up in Gillingham, Kent, southeast of London, and worked for the Inland Revenue for 41 and 17 years respectively. Like thousands of others who upped sticks in search of the good life, they rely on their UK-based income.

“When we sold our family home, we put the proceeds in a UK e-savings account,” David says, “I wish we’d transferred the money into euros — we’d have now been about a third better off.”

But despite all this, they say they are staying in France, for one reason: they love the lifestyle. “It’s like England was 40 years ago, and it would take a lot to make us give it up now,” says David.

Another couple who have noticed the difference in their income as a result of the pound’s collapse are George and Coral Luke, who moved to the area just north of Dijon in Burgundy in 2004 and have seen the value of their pensions decline significantly in recent months.

“We both took early retirement because of ill-health and live on our local government and civil service pensions, plus incapacity benefits — all of which are paid in pounds,” says George. “The prices in French shops have risen dramatically this year and the exchange rate hasn’t helped,” he adds. “Our incapacity benefit is paid straight into our French bank account. A few months ago we would get EUR440, but when I looked at our last statement, I noticed that it had fallen to EUR397 — and it looks set to get worse.”

He says they used to eat out once a week, but have had to cut back. Meals that used to cost GBP14 are now costing closer to GBP20, even though the price in euros is the same.

Eleanor O’Kane, editor of Living France magazine, says the pound’s fall has inevitably led some families to put their plans to move out to France on hold. Others are choosing cheaper areas or buying in partnership with friends or family.

“Most are still in love with the idea, because the draw of the country itself is so strong, whether it is because of the food, wine, countryside, healthcare or the lifestyle France offers. Increasingly it is young families that have been frozen out of the UK property market who are looking to move for a variety of reasons. With French buyers now accepting prices 10 per cent to 15 per cent less than advertised, it can still work.”

While French movers have tended to be better off, some of the Brits who moved to Spain are really suffering.

After the collapse of the Spanish property market left many expats living in negative equity, the decline in UK savings interest rates and pension payments may prove a blow too far.

Meanwhile, there is growing evidence that plenty of Brits are taking advantage of the exchange rate to cash in by selling up.

Bruce Borrie at currency firm Baydonhill says: “We are seeing a lot of clients, who have previously bought properties in Europe, selling and then changing the proceeds back into sterling at a very preferential rate. They are getting more for their euros than they ever have before.”

— The Guardian, London

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