Expats feel the pinch
FOR those of us living in Turkey, the Lira has gained in value against the pound during the winter period, but as always the pound is now gaining ground as we enter the tourist season once again. Living costs here in Turkey have increased in the past few months but nothing like the UK and the related costs of living in European countries using the Euro as currency.
Interest rates have remained largely the same on Lira accounts held in Turkish banks for some time and combined with the lower cost of living most of us consider we have done the right thing moving to make Turkey our home.
France has seen prices increase on many things and the Brits there are starting to gather at weekends in the small cobbled market square of Valbonne, just up the road from Cannes, reminiscing about the bad old days as they enjoy the mellow evening sunshine over a glass of the local grape.
But there is an air of gloom hanging over the cafés and bars that has nothing to do with the unseasonal cold and rain. For the army of Britons who have retired to this tranquil Provençal town, prices have in effect soared by 17.6 per cent over the past 12 months, as the pound's value has slid steadily against the euro. Last week, the exchange rate dipped to £1.25 to the pound for the first time.
Retail prices are close to what they were this time last year: a three-course lunch with a carafe of decent vin de pays is £21, just over half a euro more than it was a year ago; a café au lait on the terrace of the local bar still costs £2.50, a glass of Pastis £3 and a British daily paper about £4.
But, because of the weak pound, the same popular fixed-menu meal now eats £16 out of their British pensions and savings, compared with less than £14 last spring.
In April last year, £100 was worth £147, but today the same sum converts to just £125 - creating a painful cash squeeze for many of the estimated million British expatriates living in the eurozone. A Mediterranean lifestyle that took about £100 a day to maintain would cost almost £4,500 more per year.
Britons, of whom a record 250,000 emigrated last year, are reining in on the rosé and long lunches as the fallout from the global credit crunch hits their once-charmed overseas existences.
Sitting in Valbonne's Café des Arcades, David Dobson, 59, who retired to the Côte d'Azur with his wife, Karen, six years ago, said he and his circle of expat friends felt "helpless".
"There is nothing we can do about it," he said. "Everything we buy, from food and drink to petrol, clothes or even paying the cleaner, costs a lot more.”
Shopkeepers and tradesmen in Valbonne are also worried that the weakness of the pound could hit their takings, especially in summer. Not only have the sterling costs of food shopping, meals out and petrol shot up, but so have more major expenses like utility and telephone bills, local taxes and mortgage repayments.
Gwilym Rhys-Jones, the secretary of the Costa del Sol Action Group, a consumer protection organisation representing expats in southern Spain, said it was the worst situation he had ever known.
"The pound has sunk so low against the euro that we are really getting a hammering," he said. "Those people who live off earnings gained in the UK are facing a significant drop in the amount they have to spend here. It is just about the worst it has ever been."
It's not just expats who are suffering from the buoyant euro. Among those hit are also foreign exchange students in rented accommodation, struggling to eke out their British bank loans and grants to survive their year abroad.
Sterling expats are hoping that pressure will grow for lower European interest rates, which would cause the single currency to weaken.
In the meantime, there is still one advantage to a strong euro. Britons who have bought homes abroad have seen their properties in effect grow in value by almost a fifth. If they could only give up the sunshine and sell up, they could return to Britain better off than when they left.
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