SKY NEWS WEBSITE - EXPATS AND THE RECESSION
1:38pm UK, Monday March 23, 2009
Independent financial adviser Barry Davys tells how the recession is affecting British expatriates in Spain.
Barry Davys
In Spain, the talk is all of unemployment - el paro - with the unemployment rate at 14.4% of the working population and forecast to reach 20% bbefore too long.
At 3.3m out of work at present, Spain has the highest unemployment in Europe.
Yet expats in Spain are being hit more by UK policy actions, not Spanish unemployment.
With many expats in Spain being retired, the effect of the recession is felt through the weakness in the pound and the dramatic fall in interest rates.
The various schemes and promises to banks have weakened the UK’s position in the world and have caused sterling to fall.
Spain has long been a favourite for Britons
This has been exacerbated by the Bank of England’s reduction in the interest rate to near zero.
A person who is paid a pension in the UK and who then has to convert it to euros has seen their pension fall by 30%.
Added to this is the effect on their savings of falling interest rates.
Only six months ago, £100,000 invested in a good online account would have generated £5,100 interest per annum.
Now, for the same £100,000 they get only £950 per annum - the effect is devastating!
The worry for expats is that they cannot see an end to the low interest rates and poor exchange rates.
A typical comment amongst the expat community is: "when will it end"? It is this uncertainty that is the biggest worry for most expats.
It is very difficult to plan your future if your income has just dissolved.
Fortunately, it is possible to improve the returns, often in lower risk investments, but people do have to look outside of simple bank accounts.
In a very recent example we at Spectrum IFA Group were able to help clients rebuild their income from £2337 per annum to £8,750 per annum.
To contact Barry Davys call +34 645 257 525 or email barry.davys@spectrum-ifa.com