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Less € for your £...


Crevette

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My wife and I are on shrinking pensions and today we began to consider what options we have should the pound continue to fall. What is a concern is that it has fallen steadily with very little upward movement to take the sting out. What would be difficult would be trying to decide at what point it became economically impossible to live in France. 1.20? 1.10? 1,00? I'm pretty sure we could barely afford to live at parity. Fingers crossed for an upturn!
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We've been here before. I remember when the exchange rate was 8 FF to the Pound (about 1993/4 if my memory serves me right).

I am very sorry for people who will be affected, but it does highlight the wisdom of borrowing in the currency of your income stream. People with UK incomes/pensions trying to service home loans taken out in Euros - because the interest rates were lower - will now find those loans very expensive.

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[quote user="plod"]My wife and I are on shrinking pensions and today we began to consider what options we have should the pound continue to fall. What is a concern is that it has fallen steadily with very little upward movement to take the sting out. What would be difficult would be trying to decide at what point it became economically impossible to live in France. 1.20? 1.10? 1,00? I'm pretty sure we could barely afford to live at parity. Fingers crossed for an upturn![/quote]

We share your concerns, plod. But we wonder (optimistically!) if it would really be that much cheaper to move back to the UK. For example, even at parity, our rent (650 Euros) would still be 30% less than the in UK. Taxe d'Habitation/Foncière are usually a lot less than council tax and income tax can also be less painful in France. Utilities (apart from heating oil) will still compare favourably at parity, as would most of the food (and certainly wine!) that we buy.  There are however question marks over clothes and petrol!

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In the very near future, the ECB (European Central Bank) will be compelled to drop their discount rate (of interest), since the very high Euro is now crippling Eurozone manufacturing exporting industry.

This will move the Euro back into a reasonable exchange band; accepting that the dire fiscal and financial mess the UK's in will keep sterling low against other hard (easily exchangeable) currencies.

 

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[quote user="Clarkkent"]

We've been here before. I remember when the exchange rate was 8 FF to the Pound (about 1993/4 if my memory serves me right).

I am very sorry for people who will be affected, but it does highlight the wisdom of borrowing in the currency of your income stream. People with UK incomes/pensions trying to service home loans taken out in Euros - because the interest rates were lower - will now find those loans very expensive.

[/quote]

It fell to 6ff/£1 back in 95/96 and many pensioners were forced to sell up and return to the UK because their UK based pensions were not supporting them here and you had to have a minimum income back then to live here legally. Anyone solely relying on UK visitors for holiday accomodation this year may be in for a shock and have to diversify or do as the french do and attract other europeans who will come and bringtheir euros with them.

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[quote user="Val_2"]Anyone solely relying on UK visitors for holiday accomodation this year may be in for a shock and have to diversify or do as the French do and attract other Europeans who will come and brin gtheir euros with them.[/quote]

Over the last two years, the number of UK based vistors has dwindled from 100% to less than 10%. I have many many more paying guests from France and Belgium than I used to.

This year, only two weeks have been booked by UK visitors and that booking was made back in January.

Does all this mean that I would get more £ for my € if I wanted to visit the UK?

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[quote user="Clair"]
Does all this mean that I would get more £ for my € if I wanted to visit the UK?
[/quote]

Oh yes!  As someone who gets paid in Euros and still has commitments in the UK I have been suffering the high stirling rate for years.  Now its like I get a pay rise every month!   Marvellous! [:D]

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Quote:   It fell to 6ff/£1 back in 95/96

Did it really go as low as that?   I remember about FF 7.60 at the time you mention but surely not FF 6   .....

Still,  either figure wasn't good and it's indeed again a worrying time now.   If only one had had a crystal ball when the £ was at €1.70 three or so years ago!

I can also remember the inexorable descent in the 70's;   each time my parents went into the bank with their (English) cheque books and supporting Eurocheque cards the staff would smile (rather smugly we thought) and announce that the  <<livre sterling a encore baissé ce matin>>.   I think the low was FF 8 to the £ before the oil revenues from the North Sea started to push the £ up again.

I have to say that the 70's still seem worse to me (at least at the moment) - the stock market dropped by 70% from its peak (which in today's terms means a drop to about 2200 on the FTSE 100),  inflation at 27%,  oil having qradrupled to $12 overnight.     Now is pretty scary,   but then people were really waiting for the country to go bust. 

I just hope this one doesn't get too much worse but I'm not holding my breath!

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For those living here on a UK pension, the best bet would be to use a currency broker to move your money here. That way you would not have any charges and could fix your rate for up to two years. If you could afford it, a better way would be to say, save up your pension in the UK for six months, then bulk buy more euros, getting a better deal. I was fortunate to fix mine last June for two years. I had no idea it would change so rapidly so was very lucky. I had enquired about having my Police pension paid directly to a bank here, but the Force wanted to charge me £10 per month for that privilige. Add that to the €20 or so per month that I would have been charged to receive it in my account here and the flucturating exchange rate, over a year I would be quite a few euros lighter than by fixing the rate. I fear that the euro is likely to get stronger as confidence in the $ recedes, giving you even more reason to try and fix your rate.

Paul

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Some interesting responses, especially that of consideration about the cost of living in the UK. I suppose one problem is seeing your money disappearing month after month. I have a pension paid direct into the bank in France, I'm unaware of any charges involved but will now check. I'm thinking of having it transferred to my NW account and drawing it when needed. This would obviate some of the loss. I notice that the pound went up yesterday. It has, as some point out, happened before, it's just that we weren't really on the receiving end then!
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[quote user="plod"]I'm thinking of having it transferred to my NW account and drawing it when needed. This would obviate some of the loss.[/quote]

Have you considered opening a Nationwide Flex Account (assuming that you still have a UK address)? They give spot commercial rates and no extra charges for using non-UK cash points.

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There seems to be zero confidence that the slide will stop. In conversation with one of the specialist curency conversion companies today they were talking in terms of  getting no better than 1.22/1.23 for money forward booked for about 3 months time.  As far as our potential house purchase that may just about kill off the idea.

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DerekJ, All may not be lost in your quest to buy a house in France, as if the £ does continue to slide towards Euro parity it will have a major detrimental impact on the values of those rural French properties that appeal mainly to the Brits. As a result, you might find in a year to eighteen months time that although you get less Euros for your £, the price of properties have fallen correspondingly and you can get a great deal if you are a cash buyer.

Away from the Riviera, Provence and the Alps, purchasing a property in rural France is mainly a British love affair, as most other European nationals tend to look further south for a better climate. French buyers themselves are in short supply because of their slowing economy and high interest rates.

 

 

 

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[quote user="cooperlola"]Get a Nationwide account and use a debit card in the machine.  1.29 last time I took cash out (yesterday).[/quote]

Thats OK if you live in the UK, you can open a Nationwide account and well worth it. but for us living in France we have to stick with the same old bank that we had when we left the UK, so if your moving over it might pay to open a few accounts with different banks and swap your money around as and when they change there rates and benefits etc.

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