Reflections of Life in Spain: Is The Euro Killing The Expat Dream?

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“Expats paid in sterling are struggling to make ends meet – and many are heading home” Is not an uncommon headline to read these days, as the pound continues to take a hammering with the euro currently at its highest level since early January 2010. At the time of writing 1 euros would cost you 90.09p, or if you want it the other way £1 will get you 1.10 euros.

 

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“Expats paid in sterling are struggling to make ends meet – and many are heading home” Is not an uncommon headline to read these days, as the pound continues to take a hammering with the euro currently at its highest level since early January 2010. At the time of writing 1 euros would cost you 90.09p, or if you want it the other way £1 will get you 1.10 euros.

 

Whichever way you read it, it is depressing, especially if you are living in Spain, but dependent on your income in the UK. Immediately you will no doubt think “pensioners” and you would be right, but don’t forget those living off their rental incomes in the UK, or maybe an earn out clause from the sale of a business, and if you do think “pensioners” don’t assume ‘old and wrinkly’, don’t forget the service men and woman that have put in their years for Queen and Country and are now living in Spain.


The evidence appears compelling:

Recent data shows that the number of expats driven back home by the rising cost of living in the eurozone has gone up by a third.

There has been an 18 per cent drop in the number of inquiries for people thinking of going into the eurozone from the UK.


To be fair though it isn’t just the exchange rate that is causing the stagnation with many people stating the forthcoming UK elections and the genuine possibility of a hung Parliament (best thing for them many would say!) as a reason why they are holding back on pursuing their dream move to the sun.

I am not so sure though.

The above would all indicate high levels of thought and planning ahead of any move out of the UK to the sunny climate of Spain and a lifestyle change. But surely if you were going into that level of planning you would have factored in the possibility of a drop in the exchange rate from time to time? I am not saying that anybody could or should have predicted the current economic crisis, but to assume the exchange rate would have remained at say £1 got you 1.50 euros which it was when many people we know moved over to Spain is surely naive. It would have been prudent in the planning process to have assumed a drop to say 1.30 euros to give a little cover, a bottom line, a rainy day scenario (and we have had a lot of them this year so far), in which case the real issue would be that the current level of 1.10 euros was “only” .20 cents lower than the budgeted low.

An amount surely that could have been accommodated a lot easier? Maybe by buying less imported English products and more local Spanish products during the weekly shop. A few nights in with friends rather than going out so much.

In all the detailed planning where was the consideration to use a currency exchange service when you moved over to fix an exchange rate that gave you some protection by using a forward contract, where you can agree a fixed currency rate that you know will be set at a future date. That not only gives you peace of mind, but you can also be comforted by the fact that most of these companies will give you a better – and cheaper – deal than banks.

Living in a foreign country is hard! It requires a lot of thoughtful planning, and a huge amount of effort once you have moved: the language, the culture, the traditions, the diet and the climate all need to be understood and accommodated. In our time here in Spain we have seen a lot of people come over only to go back again, and that was long before the current recession took hold. I am sure the exchange rate and recession are forcing some to go home, but the reality is many many expats try and fail to set up a life in Spain. They always have, and always will. While that may not be as exciting a headline as “Expats paid in sterling are struggling to make ends meet – and many are heading home”, to blame it all on the current economic climate is, in my opinion, wrong!

By Chris Marshall

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