Have sympathy for those on a fixed sterling income, whether they be pensioners or working, because their real income in Spain has dropped by more than 17% since the Brexit vote or even a little before.
For pensioners, who have saved for a relaxed retirement in the sun, they at least probably won’t have a mortgage to pay, but there will be health bills or private policies and other fixed costs.
And what if you work in Gibraltar? Your income has dropped by the same amount with no compensation. If you are still working, have a mortgage, family and other fixed costs, good grief, what’s happened to your quality of life? OK sunshine is nice, but you cannot live on that alone.
At least if you sell here you’ll get more pounds to buy over there, but the costs of sale and purchase are high so you could end up losing money. And house prices in the UK, good grief again, they’ve risen on average 8.4% in the last year, with a valuer friend claiming that in the Bromley area of London some had risen by 60%!
The economists are all pleased to see inflation rising in UK, but that whittles down fixed income fast. It’s inevitable given the amount of quantitative easing/money printing that’s been going on.
The rise now was principally due to increases in energy prices, which will affect everything else. There’s talk of interest rates rising too, which again will raise costs, especially because a very small increase can double payments based upon it.
The ‘Marmagedon’ scare (No marmite because Tesco wasn’t prepared to accept the supplier’s proposed price increase), which was due to the fall in value of the pound meaning that importers had to pay more for it, was only the start. Prices for all imports are bound to rise in the UK, which will stoke up inflation even more.
It’s being so cheerful that keeps me going!
And what if you stay? Well, who knows what Government will arrive for Spain and when? Whichever, it’s got big, big financial problems that are likely to see social services cut and taxes rise.
There isn’t a choice. Hopefully, instead of money being paid in fines to the EU or being ‘locked’ in the assets of banks to keep them strong for the next stress test, whatever is available will be used to add dynamism to the economy.
If the huge asset of the unemployed can be activated to work for themselves and the national economy, they move instantly from a cost to a benefit. Keep the money churning round (and especially not off to corrupt individuals’ offshore accounts) and it will create wealth.
The lies of Brexit that caused it to win have hit expats quicker and harder than most British Citizens. Yet because of the 15-year rule many weren’t permitted to vote. And now, after the horse has bolted, the UK Government is righteously talking of keeping its promise and granting the perpetual voting right.
But for the immediate future the fixed income expat is in a hard place. And even the fixed income State pension is at risk, with talk of fiddling with it to reduce the costs to the State. But hang on, were there not so many promises made over the years that the income one paid in would multiply and be bountifully repaid upon retiral?
What’s actually happened is that it’s been like a giant Ponzi scheme, where the money paid in for investment, was actually paid out as ‘return’ to others already in the scheme.
It’s come to the natural end of these schemes where there are insufficient people paying in to cover the ‘return’ payments to those who have paid into the scheme before. ‘Bernie’ Madoff is described as an American fraudster and serving 150 years in prison for running a scheme not much different from the UK’s National Insurance.
First published in Olive Press 31st October http://www.theolivepress.es/spain-news/2016/10/31/british-expats-have-been-hit-hardest-thanks-to-post-brexit-pound-devaluation/