The pound is on the brink

[NormanH]

I know little about economics, but surely an exchange rate is a ratio between two  economies.

While I don't doubt that the UK economy is in trouble (which is what this article deals with) I don't see signs that France and Germany are exempt either, not to mention some of the weaker members of the eurozone.

[AnOther]

Of course Norman however I'll wager that 99.9999% of forum members are singularly focussed on the £-v-€ ratio and couldn't give a stuff about the Latvian Lat, Roumanian Lou, Czech Korunu, nor the currencies of any of the other nouvea Eurozone member states [:)]

[NormanH]

But they aren't in the Euro, so don't change the £:€ ratio.

Economies such as that of Greece do however.

My point was that you can't speak of the value of a currency in isolation.  The UK economy may be in trouble, but if others are too then the value of sterling will not necessarily be as low as predicted

[Pickles]

[quote user="AnOther"]Of course Norman however I'll wager that 99.9999% of forum members are singularly focussed on the £-v-€ ratio and couldn't give a stuff about the Latvian Lat, Roumanian Lou, Czech Korunu, nor the currencies of any of the other nouvea Eurozone member states [:)][/quote]

You are obviously not aware of the Complete France Investment Club, which is currently heavily exposed to a complex arbitrage position involving the Lat, Lou, various flavours of Crown, the € and the yuan for good measure.

Regards

Pickles

[Quillan]

All my Australian guests this year thought they had done very well against the Pound, Dollar and Euro as did my New Zealand ones.

[AnOther]

[quote user="NormanH"]My point was that you can't speak of the value of a currency in isolation.[/quote]As an concerned individual of course you can. I refer you to my earlier comment:

'99.9999% of forum members are singularly focused on the £-v-€ ratio

and couldn't give a stuff about blah blah blah'

I'd say that's about as isolated as it comes isn't it. What else of any significance would you include when talking to a UK pensioner on a fixed income which has diminished by 30% !

[NormanH]

[quote user="AnOther"][quote user="NormanH"]My point was that you can't speak of the value of a currency in isolation.[/quote]As an concerned individual of course you can. I refer you to my earlier comment:

'99.9999% of forum members are singularly focused on the £-v-€ ratio

and couldn't give a stuff about blah blah blah'

I'd say that's about as isolated as it comes isn't it. What else of any significance would you include when talking to a UK pensioner on a fixed income which has diminished by 30% !

[/quote]

The income hasn't diminished in sterling.

It is only the ratio £:€ which has changed.

That is why I said you can't speak  of one in isolation: you have to take into account the other currency .

[Quillan]

If you move to another country on a fixed income living at the limit of your income knowing it is at the mercy of an external force (like exchange rates) over which you have no control then more fool you. I am minded of the police officer who was on TV many months back (there was a thread about it somewhere) who was demanding the UK pay him the extra £250 cold weather allowance and thinking that he had a pretty good pension, a lot better than most. Yet he was implying that a payment of £250 was the difference between surviving in France and being destitute and then thinking, 'stupid man'.

Nobody forced us or anyone else to come and live in France. Like many I see these arguments about the exchange rate and whilst its a shame and its difficult if you moved here on such a tight budget but still more fool you. I always knew I would have to work for two reasons, not being of pensionable age and that to benefit from the French system I would have to contribute. I was under no illusion. If you feel your money goes further in the UK than in France then the solution is obvious. Us English love to have a whipping boy and seldom accept responsibility for our own failings.

[AnOther]

[quote user="NormanH"]That is why I said you can't speak of one in isolation: you have to take into account the other currency .[/quote]

You've confused me now Norman.

If you were discussing currency you'd naturally have to be talking about one in relation to another, whatever they were. I'm unclear on the point of discussing currency otherwise ?

[NormanH]

Ah now you understand.

I wrote "surely an exchange rate is a ratio between two  economies.

While

I don't doubt that the UK economy is in trouble (which is what this

article deals with) I don't see signs that France and Germany are

exempt either, not to mention some of the weaker members of the eurozone'

The point being for the ration between the £:€ that even if the UK economy is weak ( as described in the article) if there are also eurozone economies that are doing badly then the exchange rate between the two won't necessarily be a catastrophe.

Then you launched into comments about Eastern European currencies not in the eurozone, but I didn't follow the logic of that .

[dragonrouge]

Dear Quillan I truly would not wish to disagree with you but sometimes dreams and sometimes rose coloured spectacles come into play. There are many people here in France who lived the dream and are finding it tough but you do hear them moaning.

However my wife and I each worked for over 44 years and whilst not having inflation proof pensionstdo benefit from let us say we have 'good' pensions. But even being a member of a defined pension scheme brings problems UK wise. Ours is based upon the RPI so come December it will be negative and thus no increase in pension. Of course within France we are not seeing large cost of living increases? So we are being hit from both sides.

We made the decision based upon our then knowledge of our costs in Normandie and equally so more recently on our costs here in the Vendee.

In organising ourselves financially and literally about ten days ago we factored for 1.10 and then built in a 15% contingency so we can live with what is going on but others may find it more difficult and seriously the use of the phrase 'more fool you' might be absolutely spot on but is hardly helpful when as I say people may be struggling.

We commuted some of our pensions when buying our first house in Normandie and the rate was 1.675 and I resisted the urge to xfer all of our cash from our housesale in the UK here to France. Instead we bought another house and which has been rented for the last five years to the same tenant. I wanted an exit route and that has been the same in both my careers in banking and the law.

I am not saying any of this to discuss our asset position but simply to say that even with the best planning sometimes one comes unstuck. You can only do so much.

However if we decide to return to the UK it will be our decision and no one else will exert any pressure upon us in the decision making process.

[Quillan]

But surely is not the whole object of the Euro Zone that you can have strong and weak countries which sort of balance things out and act as a buffer. With the UK being effectively on its own there is nothing to help protect it from this recession. Also, I don't think anyone will disagree with you (Norman) that Europe has not been effected by the recession, some countries (Ireland and Spain immediately come to mind) have been hit worse than others although in part their demise is due to their unique self induced problems.

I also agree that to better understand whats happening with the Pound (and the Dollar) you have to look at other world currencies as well. You can't just say the Euro is strong and blame it on that. There are a lot of other currencies out there that have not had the same problems. Mind you I was talking to an Israeli this morning and they have been hit very hard by the recession as well but then like the UK they have very strong financial links with the USA. It seems to me that anyone with strong links to the USA are hard hit which seems to support those that think the source of the problem lies firmly at their door.

[Quillan]

I understand what you say Dragonrouge and you are right. The ones I am talking about are those that came over thinking the exchange rate would never change and maxed themselves out income wise to move here with no contingency plan. As I said I feel very sorry for them but they were a bit foolish going down that route. My friend, who I have mentioned before always worked on 1.40 to the pound and when it dropped below that his attitude was that he had done quite well up until that point. Fortunately by some standards he is quite well off and can afford the current rate but that's not to say it does not worry him. It's those that came over on just a state pension who are really finding it hard and from what I have seen if the rate does not dramatically improve soon will have to go back (to what I don't know).

p.s. If what one reads is correct I think I would now work on parity for the next year or two and anything over that will pay for the beers [;-)]

[Bugsy]

I keep flitting in and out of this thread (looking for some good news, I suppose) but have resisted making comment so far.

However, some of the recent stuff is pure bollox.

It must be really wonderful for those that are currently financially secure but to suggest that anyone currently struggling due to the exchange-rate are simply fools who have brought about the current situation on themselves, really is claptrap.

We may have misjudged it but we certainly didn't cause it.

[Quillan]

[quote user="Bugbear"]I keep flitting in and out of this thread (looking for some good news, I suppose) but have resisted making comment so far. However, some of the recent stuff is pure bollox. It must be really wonderful for those that are currently financially secure but to suggest that anyone currently struggling due to the exchange-rate are simply fools who have brought about the current situation on themselves, really is claptrap. We may have misjudged it but we certainly didn't cause it.[/quote]

So what was the minimum exchange rate you calculated for to be able to live in France on your income?

[BillN_33]

After last weeks advance.........get ready for it to slip back during the next few days as the "speculators" take profits

[BillN_33]

[quote user="Quillan"]

p.s. If what one reads is correct I think I would now work on parity for the next year or two and anything over that will pay for the beers [;-)]

[/quote]

What you read is never correct!

[Quillan]

[quote user="BillN_33"][quote user="Quillan"]

p.s. If what one reads is correct I think I would now work on parity for the next year or two and anything over that will pay for the beers [;-)]

[/quote]

What you read is never correct!
[/quote]

I don't know, I read what you said and went to look on FX and in the last few hours it has dropped by almost 1 cent so you were right. [;-)]

[dragonrouge]

Dear Bugbear

I am not being anything else that hopefully adopting a common sense approach. Every morning when I walk across the road and buy a baguette or take a beer in the auberge in the evenings I am grossing the price up by at least 30% it is not funny even for my wife and I.

Life just dealt us this hand and we worked hard like everyone else and we were not fortunate for what we have is what we worked for.

I saw my late father die from a dust related disease in the pits of South Wales. One week they gave us £10 to bury him the following they took away our concessionary coal.

So I do not need any lectures for my socialist background is safe what is not safe are those who suggest government wise they are socialist but another argument for another day.

However I am with Quillan we all need dreams and if you jump into a void without a way out then it is likely to cause difficulties.

The UK is the odd one out here and £ is problematical. It causes us too difficulties and we are taking a more serious approach to living.

I do not wish to see anyone and I repeat anyone suffer.

We may not have caused the present difficulties but we are all accountable for our actions. With rights come responsibility

[mint]

Dear Red Dragon

I have PMed you and hope you don't mind?

[baypond]

It always seems a shame to me that we on the forum spends so much time on the minutae of laws, taxes, insurance and rules of living in France, but very little advice is given on the dramatic changes in lifestyle that can result from living in France with earnings/assets in the UK. The simple fact is that no one can easily judge the long term path of exchange rates. If you intend to live in a country for 20 years, then look at a 20 year chart of EUR/GBP (GBP/DEM) and you will see that in any 20 year period you could have some very bad years and some very good years. And life is such that we will only hear when GBP weakens because most people either earn Euros (so we hear nothing) or earn in GBP in which case it is a disaster.

[Bugsy]

[quote user="dragonrouge"]

Life just dealt us this hand and we worked hard like everyone else and we were not fortunate for what we have is what we worked for.

I do not wish to see anyone and I repeat anyone suffer.

We may not have caused the present difficulties but we are all accountable for our actions. With rights come responsibility[/quote]

I don't think I said anything that actually disagrees with that.

The reference to 'fools' from those who sit in 'ivory towers' looking down on 'us' mear mortals are what my comments relate to.

Anyone who says that they, ten (or whatever) years ago, 'planned' for a long-term £-Euro parity situation, are not being totally honest in my book.

(unless they are boring accountants, with no life, of course)

.[:P]

.

[Quillan]

Dragonrouge - Well said.

Baypond - You have hit the nail on the head. I wonder just how many people did look at long term exchange rates. I seem to remember that when France had the Franc there was a time when people found themselves in the same boat and I think that may have been in the last twenty years. You can try and forecast for most things but when you come across things that are outside your control (health and exchange rates to name but two) you have to do as much homework as possible and work on the worse case scenario.

I accept that I am lucky to a degree as I do have an income that is generated in France. My wife on the other hand gets an income from the UK and so yes we have felt the current problems with the exchange rates. Likewise I have an ever diminishing pension 'pot' in the UK which is causing me some heartache. The thing is thats life, we don't all get dealt the best cards in the pack but there is no point in whinging about it you just simply have to get on with life and make the best of it you can.

I know of a few people who draw on pensions from the the UK. One couple have already sold their car and can't even afford to run a mobile phone. The other couple have had to open as a B&B, not easy at 78 and 76 years old. I find it all very sad and I do feel very sorry for them. I have tried to help them by finding stuff on the forum about claiming what allowances they can here in France and introducing them the French friend of mine who speaks good English (as neither of the couples do) and knows a thing or two apparently about what they can claim for. For both couples all the wheels have come off their dream and they now hate France (although its not the fault of France) and basically they can't afford to move back to the UK which depresses them even further. They see no light at the end of the tunnel and no real way out of their current situations. I am sure there are many forum members who know of people in similar situations, it really is a terrible shame.

[NormanH]

[quote user="baypond"]Ibut very little advice is given on the dramatic changes in lifestyle that can result from living in France with earnings/assets in the UK. The simple fact is that no one can easily judge the long term path of exchange rates. If you intend to live in a country for 20 years, then look at a 20 year chart of EUR/GBP (GBP/DEM) and you will see that in any 20 year period you could have some very bad years and some very good years. And life is such that we will only hear when GBP weakens because most people either earn Euros (so we hear nothing) or earn in GBP in which case it is a disaster.

[/quote]

When I came over it was still the franc, and in the late 90s we were at around 7,2/7,2 to the £.

My advice  (which is based on how I acted then) is:

 1) not to put all your eggs in one basket. Make sure you have income in both currencies, either by working or having a source of income such as something to let (even if only in an emergency). Diversify.

2) look at a long term pattern both financially and socially. the present rate is more or less a return to the ones 10/12 years ago. Similarly, the demands to have a certain income and health cover echo those of the days when it was necessary to have a Carte de Séjour. Think long-term.

3) Learn the language, and until you do keep an eye on what is going on in the new country, even if it means reading the news in a Google translation. I have posted a number of warnings about the  way Medical costs are likely to rise, but I wouldn't be surprised if this catches out some people one day in the future. Be prepared

4) get closely involved in local life, not just with other British people, and in particular try to give something of yourself. You will have a better chance of not just being accepted, but also having something to replace the things you will miss from being surrounded by the familiar. (Join an association, practise a sport like boules, join a choir, do patchwork, get involved with a political party)  . Get involved.

These things can't guarantee that you won't feel the pinch, but they make the new life more bearable

[Chancer]

[quote user="Quillan"]

 The thing is thats life, we don't all get dealt the best cards in the pack but there is no point in whinging about it you just simply have to get on with life and make the best of it you can.

[/quote]

That has always been my motto Q.

I never budgetted for the pound dropping so low for one very good reason, I didnt budget or calculate anything at all nor did I do any research, I saw an opportunity, seized it or would have lost it and from thereonin my destiny was in the hands of the gods, good fortune or in reality, what I make of it.

I didnt calculate the cost of renovation (even now I am probably not experienced enough to do so) and simply said "well it cant cost as much again as I paid for the place can it?" (answer, no, many times more) I just came over with my backpack, sleeping bag and my tools in a trailer. Healthcare didnt even occur to me until the day that I walked through a plate glass window in Intermarché.

Initially I had no income and was living on savings,  it soon became apparent that the renovations were going to take several years and would rapidly exhaust my savings, at that point I rented out my house in the UK and created an apartment in outbuildings for me to stay in. The pound at the time was relatively stable at +/- €1.48 and savings rates high compared to today.

That has changed rapidly in the last year, I did the calculation a couple of days ago when the pound was at €1.06 and found that the combination of exchange rate, 0.5% interest on savings and now having to pay council tax on my pied à terre means that my income has dropped by 48% in a year, I am now well below the SMIC but still above the RMI yet conscious that there are lot of people around me far worse of than me.

The double whammy is how much things have gone up here in France, I am talking about basic materials like timber, cement, steel etc and also basic foods, French commerciants have a very different way of coping with la crise than British ones. A bag of cement now costs me 80% more (in £s) and timber and steel studwork much more still, the prices of all these manufactured products went up when the commodity prices rocketed and have stayed there.

As our Tone said "things can only get better" [:D]