Those on a fixed income
The UK is particularly exposed to fluctuations in its currency, as it imports more than it exports.
The purchasing power of the pound has been eroded, meaning that anything bought overseas is now more expensive. This will push up prices further, causing higher inflation, which has already soared well past the Bank of England’s target since last May.
This will hit anyone on a fixed income hard, including those relying on a state pension.
Pensioners will have seen their payouts drop in real terms this year, as the suspension of the triple lock meant the state pension was increased by 3.1 per cent this April despite inflation running higher.
Expat pensioners will see this compounded by the weakness in the pound, with analysis from Ebury showing that pensioners in the Eurozone will have seen the purchasing power of their pension drop by 17 per cent this year, before inflation is taken into account.
Expat pensioners have long been vulnerable to movements in currency markets, said managing director of Ebury Mass Payments, Owain Walters.
“Unfortunately, for those moving away from the UK for their dream retirement abroad, the drop in the value of the pound on the back of the recent political and economic turmoil will significantly decrease their living standards,” he said.
Holidaymakers
This also means anyone exchanging sterling into foreign currencies
If the Bank of England doesn’t get the pound under control, it could have a big impact on holidaymakers’ plans, said Paul Craig, portfolio manager at Quilter.
“If we do see the BoE get its interest rate guns out, we may start to see some interest in the pound return.
“Otherwise foreign holidays may start to be seen as a new status symbol.”
slly.hickey@ft.com
