Sterling down the drain

[groslard]

Not good news for those whose main income is in sterling:
http://www.telegraph.co.uk/money/main.jhtml;jsessionid=D5ZJTGBF341T5QFIQMFCFFOAVCBQYIV0?xml=/money/2007/12/21/cnpound121.xml

[chirpy]

Would I be better off to buy at supermarket in France using the alliance and leicester card and then despite exchange costs it may be  cheaper as my pension is paid in uk.

[AnOther]

Like me you mean and thanks a bunch for reminding us all at this supposed joyous period [:P]

And it's only going to get worse of course with further rate cuts to come.

http://tinyurl.com/yvt5m5

 

[groslard]

[quote user="Ab"]Would I be better off to buy at supermarket in France using the alliance and leicester card and then despite exchange costs it may be  cheaper as my pension is paid in uk.[/quote]

I am no expert: I am sure there are better informed people on here than I am.

1) The credit card will be also subject to changes in the exchange rate, but depending on the day you pay it won't be the same as the changes day by day.

2) I think this means it is a sort of gamble: if you spent 100 euros to day, it may be worth say £72.

If you pay this from money you transferred a month ago you have gained if 100 euros was worth say £70 then

3) If you pay your card in a month's time it will depend which way the pound goes: if it goes down it could cost you say £75; if it goes up it may go back to £70.

Please feel free to coprrect my rudimentary understanding!

If I knew better I might have made money in my life ...

[Sprogster]

It is all a bit worrying, as a sustained decline in the value of the £ will hit hard a lot of retired Brits living abroad but reliant on UK income.

I remember in the nineties when we had the last £ crisis, a lot of retired Brits returned to the UK from Spain and France because of the decline in their spending power abroad.

In addition it has the potential to stop in its track the trend for Brits to buy foreign second homes, especially when you add into the equation the stalled UK property market and current credit squeeze.

[AnOther]

[quote user="Ab"]Would I be better off to buy at supermarket in France using the alliance and leicester card and then despite exchange costs it may be  cheaper as my pension is paid in uk.[/quote]

If your pension is paid in £ then on a given date there are only 2 ways to maximise the € yield, either use a currency broker to transfer it to a French bank A/C or get and use a Nationwide Dedit Card in France.

You don't say whether you're talking about an A&L Credit or Debit card but either way it would be madness, only the degree will differ.

The A&L Debit card charges you 1.5% (min £1.50) and then adds a foreign a trasaction fee of 2.75%, their Credit card can only be worse [:-))]

There are allegedly one or 2 other Debit cards which make no charges but the NW is the only one I can speak of from personal experience.

EDIT

Saw your 2nd post after writing this

[AnOther]

Appears that A&L are amongst the worst of a bad bunch when it comes to gouging foreign spending [:-))] 

[groslard]

This shows the problem graphically:

http://www.x-rates.com/d/EUR/GBP/hist2007.html

[AnOther]

[quote user="Sprogster"]

It is all a bit worrying, as a sustained decline in the value of the £ will hit hard a lot of retired Brits living abroad but reliant on UK income.

I remember in the nineties when we had the last £ crisis, a lot of retired Brits returned to the UK from Spain and France because of the decline in their spending power abroad.

In addition it has the potential to stop in its track the trend for Brits to buy foreign second homes, especially when you add into the equation the stalled UK property market and current credit squeeze.

[/quote]It may sound prosaic but the prudent thing is of course to ensure, before moving, that one has sufficient long term resources to weather the inevitable, and unpredictable, up's and down's of the exchange rate.

From the heady days of 2000 and 2001 what it hit around 1.75 it then dropped fairly consistently over the next couple of years to what must have been an unthinkable low in mid 2003 of roughly where we are now. Subsequently it has bumbled along in a range of some 0% to +12% of that.

I don't know about anyone else but personally I wouldn't willingly gamble my future on a drop of 12% in my income.

grosland: your link is sobering in it's graphic impact yet only represents a drop of 10%

PS: We paid for our house in January 2007 so do I feel smug, damn right I do [B]

 

[Scooby]

Our mortgage payments are in euros funded from sterling income.  However, due to the difference in sterling | euro mortgage rates, sterling will have to drop significantly before we are worse off.  Had we borrowed in the UK, although our repayments would be fixed by reference to our income, our monthly repayment would now be 30% higher than it currently is.  It will take a massive drop in sterling to erode that...especially when you take into account our (already significant) cumulative savings.  Nevertheless, it must be very worrying for those with UK source pensions who will see their spending power eroded considerably over the forthcoming months.

[groslard]

I am getting about 100 euros a month less than a year ago: not a great amount, but it represents more or less my prélèvement for the EDF each month.

[Nick Trollope]

I have to make the point (again) that when the Euro was launched, the £ was set at 1€40. It is about 2% lower than that today. Hardly a "crash". If anyone was daft enough to believe that the £ would stay at the 1.50-1.60 level then they only have themselves to blame, I'm afraid to say. One wouldn't put all of your pension on the stockmarket without taking professional advice, would you? Why do it on the currency market?

[groslard]

The difference is that the Stock Market is a gamble that one can choose: to take part in or not the fluctuations between the pound and the Euro are simply because the British Government has lacked the courage to join the Euro, and the individual is simply caught in the middle.

[AnOther]

[quote user="groslard"]The difference is that the Stock Market is a gamble that one can choose: to take part in or not [/quote]

Not sure how you get to that one.

For those on, or looking forward to, final salary pensions it might be true but for the rest of the great unwashed our fortunes (i.e. pensions and non cash savings/investments) are inextrictably linked to the Stock Markets and choice is a word which doesn't much figure in the equation [:(]

[united]

The stockmarket is only a gamble if the person who invests does not know what they are doing otherwise its a risk. The amount of risk can be managed along the spectrum from high to low. Shares have proved to be the best investment over the majority of longer term timeframes in the last 100 years.

I dont think Government courage is the issue nor is the impact on us 'in the middle' that has prevented the UK joining the Euro its more complex than that.

Also an individual could have reduced the impact of fluctuations in the exchange rate through product offered by currency dealers.

[groslard]

Also an individual could have reduced the impact of fluctuations in

the exchange rate through product offered by currency dealers.

I didn't know about that.

As I said I'm pretty ignorant about Finance. All I know is that my Pension is paid directly in Euros into my French bank account, after being converted in the UK, so I am vulnerable to currency changes.

I would never gamble willingly  on such things as Stocks and Shares, and have never had any capital.   That was my point about the difference.

[Nick Trollope]

[quote user="groslard"]

I would never gamble willingly  on such things as Stocks and Shares, and have never had any capital.   That was my point about the difference.

[/quote]

I take your point, but you were/are willing to gamble on the currency markets. Noone forced you to receive your pension in Euros (out of necessity, I appreciate), that was your choice and you didn't expect the rate to stay put.

I have every sympathy with your plight and I can't offer any relief, I'm afraid - we are not, IMHO, going to see the heady rates of a couple of years ago for the foreseeable future.

My original point was that the currect rate is not necessarily bad news for everyone!

[AnOther]

Anyone remotely hesitant about buying € would do well to read THIS

[Benjamin]

The "Gamble" was taken by all of those having an income in any other currency than the €uro when they decided to live in another currency zone. Plain. Straightforward. Simple.

[groslard]

Not quite accurate, since the Euro didn't exist, and the UK might have joined it.

I take the point that living in a non-sterling area with a pension in sterling involved an element of risk when I came over here, but that could have disappeared if for example Blair had kept his promise to join.

So it's not "Plain. Straightforward. Simple."

I have noticed a tendency on these boards to assume that all British people over here have come in the last few years (since about 2000 when the Euro came in) so I understand your over-simplification.

It's the same with the "CMU de base" which was a 7 year aberration, unknown before 2000 (see my post on it called "a slight alteration")

This also wasn't in force when I came here.

And I'm not shouting "retrospective" just because things are turning sour..[:)]

[Russethouse]

And I'm not shouting "retrospective" just because things are turning sour

Why would you ?  You are not comparing like with like.

[Scooby]

[quote user="groslard"]Not quite accurate, since the Euro didn't exist, and the UK might have joined it.

[/quote]

But you were still moving from a jurisdiaction with one currency (sterling) to a jurisdiction with a different currency (Franc) - with the hope, i.e. taking the gamble, that both jurisdictions would move to a common currency.

[groslard]

Well the Euro didn't exist ( as the CMU didn't)

then there was the chance that Britain might join (but it didn't although it said it would)

If coming here and relying on a certain stability in exchange rates is a gamble, so is coming here and relying on a temporary (2000-2007) arrangement for health care.

But the changes to the CMU and the decision not to join the Euro are political decisions, which every Government has the right to make.

The fact that I might be inconvenienced by them is the same in both cases.

Both situations could get much worse:  in Economics a collapse of sterling, and in Health a right-wing UK government that decides to abolish E106s and E121s.

Let's hope not!  But be careful of judging other people's "gambles"

 

[groslard]

Yes true as I said "I take the point that living in a non-sterling area with a pension in

sterling involved an element of risk when I came over here"

[Scooby]

[quote user="groslard"]

If coming here and relying on a certain stability in exchange rates is a gamble, so is coming here and relying on a temporary (2000-2007) arrangement for health care.

[/quote]

I agree. 

I am not judging someone's gamble - I am simply saying that that is what it is - a gamble.  As I have said already in another post, I have friends who emigrated to a non EU country 25 years ago and who have had the trauma of seeing their UK pension frozen so that it is now worth a pittance.  They face the prospect of working until they are 75.  Having seen them struggle, we had no desire to 'join them' as a member of a another marginalised foreign community.  Others may have felt it was worth the risk - but that is their choice.