British expats are returning home as no-deal Brexit scenario cuts savings

Pedro Gonçalves
clock • 3 min read

Thousands of British expats are returning home amid fears of a no-deal Brexit scenario that is already plunging the pound against the euro, slashing their savings.

Both UK and the European Union have warned of a no-deal Brexit, as negotiations seem to be at a standstill. A scenario that has caused the pound to plunge to its lowest against the euro in nearly a year.

With their savings getting smaller by the day because of the exchange rate, thousands have left Spain and returned home in anticipation of Brexit. Against the euro, the sterling was at 90.08 pence this Thursday.

Around 5,000 Brits are thought to have been living in Benidorm on the eastern coast of Spain before the 2007 financial crisis- but that number fell to 2,825 last year. In the same period, nearly 5,000 left Ibiza, Majorca and Menorca.

Overall, the number of British expats in Spain dropped almost 8,000 to 285,698 in the last year, according to the official figures from Instituto Nacional de Estadística.

The no-deal Brexit scenario has gained strengh after the UK government published last week its first technical notices advising businesses and consumers on the preparations being done for the prospect of there being no Brexit deal, as reported by International Investment.

British prime minister Theresa May claimed that a no-deal Brexit “wouldn’t be the end of the world,” as she sought to downplay statements made by chancellor Philip Hammond.

In Brussels, the European Union’s chief Brexit negotiator Michel Barnier said on Thursday the bloc must prepare for a no-deal Brexit, even if its goal was an orderly exit. (continues…)

Expats should safeguard their finances

As the future relationship between the UK and Europe remains uncertain, for those expats that will remain in the EU, experts have one advice: Brexit proof your finances.

The estimated 1.8 million British expats living in the EU should consider reviewing their personal financial strategies as no-deal Brexit looks increasingly likely, warns deVere.

“If the UK crashes out of Europe with no deal in place, the estimated 1.8 million expats living in the EU could be financially impacted in two key ways.

“First, the pound would inevitably suffer and it could fall hard. This would deliver another heavy and serious blow for those who receive UK pensions or income in pounds as the cost of living, in effect, would be significantly more expensive.

“Second, unless there is considerable post-Brexit collaboration between the UK and EU there is a risk that existing payments from British companies, including pension and insurance companies, to those living within the European Economic Area (EEA) could be disrupted or even made impossible. Of course, this would be a major inconvenience to many UK expats,” James Green, deVere Group’s divisional manager of Western Europe, said in a statement.

The financial sector gets defensive

Acorn Income is shifting the allocation of its portfolio to a more defensive positioning as the risk of a no deal Brexit looms.

The £68m trust is split into two parts, with Unicorn Asset Management’s Simon Moon and Fraser Mackersie responsible for the smaller companies equity portfolio, and Premier Fund Managers’ Paul Smith running the bond portfolio.

At the end of June the portfolio was split 80% to 20% in favour of smaller companies but chairman of the trust Helen Green said the board had agreed to change the allocation ‘to take a more defensive position’.

“There is little doubt that the uncertainties surrounding Brexit are impacting the market valuation of smaller companies with a domestic focus,” she said alongside the trust’s half-year results.

The Square Mile could see up to 12,000 jobs lost in the short-term aftermath of Brexit with thousands more at stake longer term, the City of London Corporation has warned.

However, unfazed by the tale of divorce between the UK and the EU, Swizz bank Julius Baer is targeting the north of England.

This year the bank opened offices and hired 30 private bankers and support personnel in Manchester, Leeds and over the border in Edinburgh and, according to Bloomberg, it is just about to cut the ribbon on a location across the Irish Sea in Belfast.