Almost a quarter of Britons are “seriously considering” leaving the country to avoid the economic slowdown, according to a survey by HiFX, the currency specialist. However, with the pound having hit a record low against the euro this month and property prices continuing to tumble across parts of Europe, expatriates are finding themselves far from immune from the global financial crisis.

More than a million pensioners have already flocked abroad to soak up the sun in their retirement. The Office for National Statistics says that 85,000 families decided to quit the UK in 2007.

Mark Bodega, of HiFX, says: “With the UK economy in turmoil and the hope of better job opportunities abroad, more and more Britons are considering emigrating. However, it has never been more important for people to do their homework and find out if the grass really is greener on the other side.”

Millions of British expatriates whose income is fixed in sterling - particularly pensioners or those relying on rental income from the UK - have seen their spending power steadily decline over the past 20 months.

At its peak in 2000 the pound was worth about €1.70, but this week it fell to €1.06. This means that the state pension of £90.70 a week was worth €154.19 in 2000, but only about €92 today. The current volatility of the pound makes it increasingly difficult for expatriates to predict exactly how much their sterling will be worth.

Christian Somma, of Abacusfx.com, another foreign exchange specialist, says: “Sterling has lost about a third of its value over the past 12 months, but I think that it has reached its lowest point. In fact, I expect the pound to start benefiting from a weakening euro soon. We could well be back to €1.25 or €1.35 in the coming months.”

It can also be expensive to transfer funds from a UK bank account into overseas accounts. Stephen Heath, of FairFX.com, another currency specialist, says: “Many UK high street banks offer poor exchange rates - anything up to 1 per cent more than the wholesale cost. It is vital that anyone who intends to make money transfers overseas shops around to obtain the best exchange rate.”

Some banks charge an upfront fee for money transfers abroad, of between £10 and £30. Some continental banks also charge a “receiving fee” of between 0.1 per cent and 0.5 per cent of the transaction, so the cost of transferring money between banks can soon add up.

Many currency specialists, which generally offer much more competitive exchange rates of about 0.2 per cent to 0.4 per cent more than wholesale cost, allow customers to fix their rate for up to 12 months to protect against wild fluctuations. The money is transferred to the specialist currency company before landing in the overseas account and comes with no charges.

The value of sterling may have taken a bit of a pummelling, but European economies have problems of their own. While British house prices fell by 16 per cent last year, Spain and France, the two most popular destinations for British expatriates, have suffered similar falls.

Prices in Spain are expected to drop by 5 per cent this year and 8 per cent next year, according to BBVA, the Spanish bank. The construction industry in Spain has now ground to a halt and BBVA estimates that there are 1.4 million unsold new homes.

Charles Weston Baker, of Savills International, the estate agent, says: “House prices in Spain and France have already fallen by between 5 per cent and 10 per cent, but this varies between regions and it really depends on the property. Recently, one client in the Costa del Sol was forced to sell his property for 44 per cent less than what he paid 18 months ago, while another in southern France sold for only 2 per cent less than he paid.

“This could provide some good buying opportunities for bargain-hunters, but many people are playing the waiting game to see how prices pan out.”

A weak pound could also have tax implications for property sellers. Matt Coward, of PKF, the accountant, says: “Even if homeowners make a loss in euros on their property, they can still be liable for an unexpected UK capital gains tax bill.

“Say that a UK national bought a Spanish property for €1.25 million (£854,818) in January 2007 and sold this month for €1 million (£966,744). Although there is a loss in euros, there is a profit in sterling of £111,926, on which the homeowner will need to pay UK capital gains tax of at least £18,419 on January 31, 2010.”

In a further blow to the Spanish property market, last year some British owners of illegally built properties on the Spanish coast had their homes demolished after a new drive by the Spanish Government to protect coastlines. Other homeowners in similar positions were informed that the State now “owns” their property, making it impossible to sell.

Peter Girling, of Girlings Retirement Options, a rental specialist, predicts that many expatriates will return to the UK this year. He says: “As pensioners in Europe struggle to make ends meet, we are seeing clients let out their places in the sun and then rent a property back in the UK using the income from their villas abroad.”

Those who are still determined to live in the sun may wish to look beyond the most popular destinations. Mr Weston Baker says that Montenegro is popular because it offers good value for money. A two-bedroom flat with good views is about £80,000 and living costs are much lower than Northern Europe.

“The cost of living has been rising in France and Spain, as it has been in the UK, which is becoming an increasingly important factor for those looking to buy abroad,” he says.

Case study

Heln Rigby moved in 2006 from Tunbridge Wells, Kent, to southern Spain, where she and her partner, Andy Russell, run a painting holiday business.

Ms Rigby supplements her Spanish income with a buy-to-let property in England, as well as her savings in the UK. Although she uses a currency specialist to obtain a good exchange rate and avoid bank charges when transferring money to Spain, she says that the falling value of sterling has hit her hard.

“Falling interest rates and rents are also a worry at the moment, since this will have a big impact on my income from the UK,” she says.

“To maximise our Spanish income, we are diversifying the business. For example, we now offer art classes for local people and English lessons to Spanish children. I am concerned that fewer tourists will be visiting this year, so we are trying to attract more local custom that pays in euros. We are also letting our house, which sleeps eight, as bed-and-breakfast or self-catering accommodation.”

As Spain heads into recession, Ms Rigby has noticed that the value of property in her town in Andalusia has fallen and that many houses for sale are simply not shifting.

“I know a few expats who are thinking of packing up and heading back to the UK,” she says. “But we love it out here so much, we are determined to ride out the storm and focus on expanding the business.”

For more information on Ms Rigby's business, go to www.paintinginspain.co.uk.

Complex costs of retiring abroad

Britons thinking of retiring overseas should check their state pension, benefits and healthcare entitlements, as these can all vary depending on where you live.

Expatriates who claim certain disability benefits and the winter fuel allowance in the UK will only be able to continue receiving these benefits if they remain in the European Economic Area.

Pensioners should note that the UK state pension, though not taxed at source, may be taxable in certain countries. And those retiring to some Commonwealth countries, including Australia, Canada, New Zealand and South Africa, do not benefit from index-linked state pensions. Most expatriates retiring abroad - including those in Europe and America - have their state pensions increased annually in line with prices, as do pensioners in the UK. But those living in some Commonwealth countries have the value of their state pensions frozen.

A group of 13 expatriates tried to challenge this rule last year, claiming that they were being discriminated against by the British Government, but their case was dismissed by the European Court of Human Rights.

The group was lead by Annette Carson, who moved to South Africa in 1989. She receives only £67.50 a week from her state pension, the going rate when she retired. If she had stayed in Britain, she would now receive £90.70 a week.

Gordon Lishman, of Age Concern, says: “The disappointing ruling on the Carson case means that older people continue to be penalised for wanting to retire abroad. It is hugely unfair that these pensioners have made their national insurance contributions but are not getting their fair share.”

It is also vital that those planning to move abroad find out about healthcare costs. Expatriates are generally advised to take out health insurance to cover private medical and dental treatment. If you are visiting the UK on holiday, you will only receive emergency treatment free of charge - you may have to pay for other treatment.