Rosemary Righter
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This Sunday, on the shortest day of the year, I was woken at 7.15 (6.15 British time) by brilliant light streaming through the windows, and stepped into the bathroom to watch the sun rising into summer-deep blue sky over the Leonessa, the lion-shaped hill that marks the rise of the snow-dusted Apennines, visible for miles away in the still, clear air. Sunrise brightened the gold of the oak leaves, most still on the trees, the startling orange of ripe persimmons and the silver olive leaves, before picking out the nameless yellow flowers that look just like jonquils but flower from October right through January - wild flowers, a present from a passing bird. There are things money can't buy.
More than enough of them, in this glorious corner of Umbria, to take the expat mind off the things a pound can buy precious little of in euroland this Christmas. Such as, er, central heating oil - but who is not cringing at their central heating bills back in the UK? And we can always fall back on ancient wheel-about stoves cheaply heated by gas bombolas. Their use may well be outlawed here in Italy, as they certainly would be in H&S-obsessed Britain; but in Italy no one bothers about such finicky details. No, decidedly no: this semi-expat is not for moaning.
What's more, I find the sob stories from continent-bound Brits panicking about sterling's sudden and undeniably painful downward plunge against the euro somewhat perverse. The time to fret about the cost of living in the eurozone is not now. It was when the euro became legal tender in 2002. Exchange rates are a today-tomorrow thing - remember how the euro tanked following its firework-popping formal launch ten years ago this coming January? But there was nothing impermanent about the hefty increase in the price of just about everything that accompanied the moment of conversion from national currencies.
Here in Italy, the government sent lira-euro calculators (Lt 1,936.27 to 1) to every household in the land. It must have forgotten to send them to the bars, the restaurants and the shops, though, because most retailers evidently found it simpler to convert at 1,000 to 1, more or less doubling overnight the cost of the grocery run and, to universal outrage, of that quick shot of espresso without which no Italian can face the day ahead.
So, if they survived that hit to their standard of living, and before they take the estate agents' fire sale advice to knock 40 per cent or more off the asking price of those just-refurbished houses in the Dordogne, Chiantishire or Marbella and tail it homeward, my advice to my countrymen would be to think a bit about why the pound has slumped to near-parity with the euro, and how long it will stay down. They may not know the answer: who can, with confidence, say they do? But at least they will have asked the right question. If their answer to the first part of the question is the word “Brown”, maybe they will think twice about rushing back to the Blessed Plot.
The euro has won this round of the beauty contest, no question; but there are only ugly sisters in the line-up. It has roared up against the dollar as well as the pound this month, though it is worth remembering what a seesaw ride the euro-dollar rate has been since summer. The euro hit a record high of $1.59 in July, only to fall to $1.25 in late October before it bounced up to $1.39 last week.
But this has had far more to do with the widening gap between ECB interest rates, still 2.5 per cent, and America's, now near zero, than with confidence in the eurozone's economic health - which is low, and sinking fast. With Germany headed into its worst recession since the war, France contracting, Italy in the doldrums and Spain's already high unemployment soaring with the bursting of its property bubble, the Deutsche Bank expects the euro to be back down to $1.21 within a year.
As for the 20 per cent fall of the pound against the euro, an overlooked factor is that, reflecting stronger growth in the UK than in core eurozone countries, the pound has been extremely strong in recent years (too strong, in terms of purchasing power parity, making London the most expensive city in Europe). The higher you climb, the farther there is to fall.
When the City hit the rocks this autumn and “No more boom or bust” turned into “No more boom. Bust”, sterling was heavily hit. Logically enough: the UK's heavy reliance on financial services made it likely that it would suffer a particularly severe recession. In addition, investors were alerted to just how much of that seemingly impressive growth had been buttressed by public borrowing and a three-fold increase in household debt. The final straw, though, was yet again interest rates: once the Bank of England slashed rates to 2 per cent with further cuts expected, sterling assets looked decidedly unattractive.
Brits living in continental Europe have to put up not only with shrinking wallets, but a touch of condescension. The French feel vindicated in their distrust of le capitalisme sauvage (which really means distrust of capitalism). After a decade enduring lectures from Gordon Brown about their earthbound economy, the Germans are being less than tactful about their views of his housekeeping. And here in Italy, La Stampa gleefully calculates that, at the current exchange rate, Britain's GDP was lower than Italy's.
Not that the newspaper was as gloating about this discovery as all of Italy was back in 1987, the year of the short-lived sorpasso when Italy overtook Britain in the international wealth league. For Italy, too, it said, there was “nothing but trouble ahead”; no one is talking about an economic miracle, far from it. It is widely understood that the strong euro is no blessing, and also that the eurozone recessions could be more stubborn and lasting than in Britain and the US because of the ECB's slowness to cut interest rates. The pound would then perk up.
What people do ask, in amazement, is why on earth the Brits, instead of savaging the politician who got them into this mess, are more inclined to vote for him. Is it masochism, or fog on the brain (the myth of smogbound London never dies)? Or are we just plain thick? To feel broke is bad; to be thought stupid is worse.
Rosemary Righter has worked for the Far Eastern Economic Review and Newsweek in Asia, as development and diplomatic correspondent of The Sunday Times and as chief leader writer at The Times, where she is now an associate editor. She has written four books, including a history of the United Nations
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I totally disagree that the euro is the winner - the euro being on a massive high puts it in the same position as Britain in the 1980 recession - massively uncompetitive and facing dire unemployment and recession. In a non-inflationary economy to be the highest exchange rate is the worst card.
Roarke, Wembley, UK
The pound has fallen 25% compared with the local currency. But that also means our local investments have increased in value compared with the pound. If we have a further 25% fall, it would be great as we could sell up here, return to the UK buy a few cheap houses, wait for the rise then off again.
CR, Manila, Philippines
Today my wife and I drove the 45 minutes from our mountain home to Mojacar on the Costa Almeria. We had a picnic lunch with flask and sandwiches on the beach - it was so hot I took my jumper off and the sea and sky was bright blue. Credit crunch - who cares?
Bob Pratt, Almeria, Spain
Exchange rates are only very loosely connected to quality of life and happiness. Switzerland has always enjoyed a strong currency, but I've never met so many malcontents and whingers as in Geneva. The poorest Philipino/a is generally more cheerful, and what can you buy with the peso?
Chie, Tokyo, Japan
We're lucky. We have a giant expat shop in the north of our country, called Newry. I believe a Mr Paisley just retired from running it and now a nice Mr Robinson has taken over. Their prices have be sashed.
*cough*
Ciaran, Greystones, Wicklow, Ireland
I am in France and the UK. My car boot tells me the exchange rate situation. For 4 years it was full of food and wine going back to the UK. Now its full of Oz wine and UK food going to France. We bought a 6.8 kilo turkey in Waitrose for £22. We saw a 2kilo turkey in France for 22euros. QED.
Jon Frederics, London, UK
At the moment, people are duped by Gordon's 'do anything with your billions to try and reflate the economy.' They won't be so easily fooled when more famous retail chains fail; job losses go beyond 2 million and towards 3 million and repossessions rise. Esp when they know tax rises are coming.
Donna Walker, Effingham, England
I'm an expat and am having a bit of a problem with finances due to falling exchange rates. Cut down on eating out and the luxuries you have got used to. Remember the 40/50s and cut the cloth accordingly. If you didn't budget for a fall in the £, you should not have left the UK.
Graham, Khon Kaen, Thailand
Steven D'hoe, expatriates do not give up their right to vote by leaving the UK. Voting is made more difficult for expatriates, but it is certainly still possible. There are various web campaigns about this running at the moment. It's important that British citizens know their rights.
Helene, Strasbourg, France
JF Canterbury: Going well until you got to 'cheaper than in France, too, ' and then 'often a lot better............'. Ho! Ho! Ho! . Surely notte! Impossible!
Jay Fitzgerald, Brisbane, Australia
Mick "Immigrants" and "ex-pats". Someone who comes to (any) country to live is an Immigrant to that country. People who leave their home countries are Emigrants, and are also called ex-patriats (ex-pats for short) as they live outside (ex) their country (patria) - its the English language.
Peter, London,
"most retailers evidently found it simpler to convert at 1,000 to 1"
Exactly the same thing happened in Spain where the 100 peseta coin was "replaced" by the 1 coin which actually cost 166.386 pesetas. The cup of coffee inflated by 66% overnight.
Richard, Alicante, Spain
I am an Btis ex-pat and I live in Abu Dhabi where the dirham (UAE currency) is pegged to the US dollar. So for this year i have had a 25% pay raise without even trying.
My mortgage in UK looks very small these days.
Geoff Bottomley, Abu Dhabi, UAE
They are feeling the sudden effects of a devalued currency, caused by a devalued Labour party; but the people in Britain will over time, feel these effects in inflation, because we import now so many things. Brown's incompetence knows no bounds.
A Walton, Leicester, England
I find the attitude of some expats astonishing. Why did they move. If its the way of life then join in. In France, where we live, the locals all grow their own food and do not dine out twice a week.
We are accepted more than most of the wealth flashing Brits purely because we live like the French.
Gordon Steadman, Ronsenac, France
Traffic to timesonline would doubtlessly drop off a cliff if expats stopped posting. The weather's lovely, the food's cheap etc, they say. If it's so wonderful why still cling on to Uk culture? You made your choice expats - and good for you - but leave the rest of us to enjoy the UK you so despise.
Tony, heswall, wirral
To those jelous of ex pats far from somehow depriving the U.K. economy by their absence they help the remaining resources go round further. They don't draw in the public services they paid to receive, e.g. NHS Bus passes et c.
Plus they have vacated the rarest resouce of housng.
Heros of the state
Steve Douglas, Wimborne, England
Well I live in Finland with my partner and we could not be happier, we left the Uk 3 & 6 years ago respectively, and would not consider ever going home. We have a nice apartment and are both working and have a fantastic life here.
Jim, Oulu, Finland
It's interesting that people who move from abroad to the UK are labelled "immigrants" by the UK press, yet when UK citizens move abroad for a better quality of life they are given the cosily warm tag of "ex-pat."
Mick, Cork, Ireland
I remember Il Sorpasso, when Mrs.Thatcher was asked about it on Italian TV; "I'm SO glad to hear that" she said "I look forward to Italy taking Britain's place as the second biggest contributer to the Common Market". They must have found an Italian way out of that dilemma
Tom Benford, Kyoto, Japan
Exchange rates come and go. This will pass in due course. Always keep your main income in the currency of your residence! If not, don't forget to save in the good times.
Colin, Shrewsbury,
By leaving the UK you've decided to give up the right to vote & get involved in UK politics in the same way that you are no longer contributing to the UK economy: you take money out of the UK and spend it elsewhere in Euroland. The saying "You can't have your cake & eat it" springs to mind!
Steven D'hoe, Ross-on-Wye, UK
I remember when the £ was around 10DM or around 5 euros.
Anyone waiting for the rebound to these levels will be waiting for a long long time I fear.
I'm an expat but not the slightest bit depressed. Like so many others I live and work here and am not retired.
william rodgers, Paris,
I live very happily in Spain with my Spanish wife (married in England 36 years ago) but savings apart, the pensions come in £ and there is no escape from that. The private pensions have been plundered by Brown and the State pension devalued by false inflation figures. Now, devaluation. Thanks G.B.
Richard, Alicante, Spain
Why are we paying British pensions to people living outside our country ? What a ludicrous situation. This is just throwing money out of our economy. If these people like the country they are in so much they can look to that country for support. There will be no free rides ahead.
Chris, Oxford, England
How many years of good times have these expats enjoyed? While UK residents have lived in smaller houses, with less sunshine and paying more for less, the expats suddenly feel hard done by? Now that the fat years are over, it seems a little precious that they need to tighten their belts.
Jonathan, London,
We live in Italy.next door to Umbria in Marche We also feel lucky even though our dwindling pensions(thank you Brown) have been hit by the exchange rate. We still have strawberries growing in the sunny garden in December. More important we feel free, happy and have a wonderful lively community
c chapman, corridonia, italy
I suppose I don't qualify as an "ex-pat". I left England for Germany in the 1950s. I learned the language, integrated, studied and eventually took on dual nationality. My life's earnings, savings and taxes have been in DM and Euro. The current weak pound leaves me cold.
alan, germany,
Just before the an average espresso coffee costed 1400 liras. Now it costs 0.80 (1550 liras). Hardly double. has greatly helped our economy. Without this crisis would be much worse. Stop blaming the for everything!
Giorgia, Italy,
At last! The point that the euro is too strong has hardly been mentioned in the UK press over the last few weeks-well done!
I live in France on a UK pension and,yes,it hurts.
I read the French financial press and there are universal cries for the value of the euro to fall.
Fingers crossed then
John Emsley, Meillac, France
Wait until the Pound equals 10 cents (Euro) the outward flow for holidays stops, the inward flow of touristas booms, our faithful immigrants leg it to the Continent and anything we export has a 90% markdown and Continentals snap up the unsold housing.
Hey Presto! National Debt wiped out.
Michael Murphy, brightlingsea, england
The contradiction in the position of the UK is to have accepted the EU single market but not its obvious concomitant i.e. a single currency. It is a vain attempt to be both inside and outside at the same time. It does not work. It will if the pound reaches parity and the markets keep it there.
JL, Grange,
The thing that grates with us euro-expats (dependent on sterling pensions) is that we can't vote Brown out. An American, Frenchman and just about every other nationality can still vote in their national elections.
Geoffrey Walker, Bordeaux, France
Don't make the assumption that all people leaving Britain have loyally kept their money in the Pound I know many who changed to the Euro when they left Britain.
These people will make a hefty tax free profit if they are insane enough to want to return to that that Greedy Isle.
Lance Thynne, Berlin, Germany
Bring it on. If anything good comes of all this it could be that there will be fewer cringe inducing Brits in Umbria and Tuscany with their "I simply adore Tuscany" refrain. Anyone who based their retirment on the daft assumption that the pound's strength would gaurantee happiness abroad deserves it
Sparky, Castiglione del Lago, Italy
To John Kidd in Oz
I live in the UK and avoid Londonistan like the plague. There are plenty of other places for ex-pat Aussies to congregate. You are attracted to Earls Court like lemmings and I have watched with horror as you are fleeced and your bones picked over. Try living with the true Brits,
John, Durham, UK
We are still happier here than in the UK (Family excepted) weather, lifestyle, traffic or rather lack of and a host of other things. Yes we take the rough with the smooth, tightening ones belt in France is no different than anywhere else.
Jurgen, St Maixent sur Vie, France
I remember all too clearly the day we fell out of the ERM that painful, after which the pound came back strongly, as it will again.
There will be an up side, eventually, there always is.
maggie millington, Brittany, France
It seems to me that it is like a race to the bottom of a hill with the US first, the UK second and Europe third. Everyone has to get there before going up again. The slower one is, the longer it will take to climb up again.
P. Brooks, Palm Bay Florida, USA
If the pound has weakened by one third against the euro then expats should be able to absorb a 33 percent drop in the value of their houses with no problem since they will still be receiving the same number of pounds.
Ian Stuart, Frederick, USA
This is all temporary and not just because there is always movements between currencies. Eurozone is in economic freefall and at least two countries -- rumours are Greece and Ireland -- may leave the euro, and they will do so (as they must) overnight. When that happens, the euro will collapse.
Martyn, London,
The recession on the Continent will be painful but in the UK it will be ghastly. UK manufacturing is in decline with the service sector now dominant. State and private debt is vast. The family silver has been sold with only a few pieces remaining e.g now Aldermaston to the Americans. L 1.50 to 1E ?
Paul, Charlottesville , Virginia,
I agree with Alyssa. You all left the UK when the pound was high. Now the pound is heading south.... Sorry you made the choice. You left the party so don't expect anything but scraps from the bin out the back.
Russ, Melbourne, Australia
Spare a thought for the poor old Aussie traveller who, after a recent collapse in the Oz Dollar, now gets only 48 Euro cents per dollar. We have also fallen 10% against the Pound so already expensive London will outrageously over priced. But we have the compensatory delights of our beaches.
John Kidd, Brisbane, Australia
What strangely reasonable comments this article has generated, compared to the usual rabid ranting. I'm in South America, and the pound to the dollar is the only important exchange rate there. The rate has fallen to ... exactly what it was when I left the UK, in 2005. Nothing more.
Vanessa Carr, Chachapoyas, Amazonas, Peru
As an expat, you have to take exchange rate movements as part of the move. Even though Spain, has suffered, life here is still fabulous. Even today, lunch on the beach for 25 euros for 3. Now that is just not possible in the UK. Lets not mention, great roads, healthservice and family life.UK no thks
rob, Malaga, Spain
There are only about 500,000 UK expats in Europe (about 200k each in France and Spain and 100k elsewhere), There are 62 million people in the UK. Are the majority to be ignored to pander to these expats who left of their own free will? They took a bet, they lost, deal with it and stop whinging
Alyssa A, Southampton, UK
Actually, we Germans don't care at all about Brown and probably most of us don't even know who he is. I doubt British expats over here get much lecturing on fiscal policy simply because the "worst recession since the war" seems to exist only in news media and we wouldn't blame the British anyway.
Matt, Berlin, Germany
The columnist is quite correct. There's nothing set in stone about exchange rates. We have to take the rough with the smooth. My favourite wines are now the same price in UK supermarkets as in Calais, so why bother to go? Eating out in the UK is cheaper than in France, too, and often a lot better.
JF, Canterbury, UK
Thanks. I could do with a bit of cheering up. We live in Hungary, where the pound is in freefall against the forint (the what?). BUT, children greet all adults politely in the street, and at the Trofea Grill you can still get a five-star all-you-can-eat-and-drink meal for £10. Great! Join us..
Proger, Orbottyan, Hungary
Yes. It's a case of see-where-we-are-in-a-couple-of-years with the exchange rate (and economy), I think.
Dan Smith, Rochester, UK