Why is the pound in a state of collapse ?

[Chrisdee]

Now Germany have admitted they are going down is that going to make a difference to the pound?

[Drewth]

Thanks Bank of England, you've just talked the pound down even lower:

£1 = 1.184 euros
euro = 84.4 pence

[koali]

I can't see the thinking behind that.I bought Dollars at $2.04 to the Pound. The rate is now $1.50 to the pound,which means I get more pounds back than I spent buying them.

I don't suppose the vast majority of people would even understand the currency markets to be able to consider doing that nor even have the nerve to gamble money on such outcomes. If they did, millions and millions would not now be facing hard times.

[DC]

Very interesting discussion on the co.uk forum re the death of the Pound. Someone there reckons they've hedged their losses by buying US Dollars. They obviously haven't seen the collapse of Sterling against the Dollar either and will have done an awful deal.

I can't see the thinking behind that.I bought Dollars at $1.98 to the Pound. The rate is now $1.50 to the pound,which means I get more pounds back than I spent buying them.

[koali]

Having had our pension arrive in the account here yesterday, I can tell you, no Commercial Day 25th December for us this year !

The bar will have to depend on the Spanish spending money - they aren't getting ours at this time.

Just say 'NO' to 25th December. You don't need it, the debt built up on one day is stupidity and why fuel a pretty rotton system anyway ?

For every pound we got a euro and twenty cents. Happy memories of a year ago.

[John50]

Just read this magazine article:

Ex-pat pensioners hit by incomes drops

By Press Association

In the news

November 2008 00:00


British pensioners living abroad have seen their incomes dive by 20% during the past two years due to the falling strength of the pound, figures showed today.

A couple living in a euro-zone country whose only income is the basic state pension would have been nearly 200 euros (£160) a month worse off in October than they were 21 months ago.

One pound currently buys 1.25 euros, down from 1.53 euros in January
2007, but up from 1.22 euros last month, according to currency exchange group HiFX.month, which in January last year would have bought them 960 euros.

But by October this year, the value of their pension would have fallen to between 766 euros and 816 euros, depending on when they converted the money - a drop of up to 20%.

If the pound continues to slide from its current level of 1.25 euros to the pound to 1.15 euros, people will see their pension fall by a further 750 euros (£600) during the coming year.

Government figures show that just over one million pensioners currently live abroad, and many will have seen their incomes hit by the falling pound.

Mark Bodega, director at HiFX comments: "Any pensioners who have not set up a regular payments abroad system to transfer their pension income at a fixed exchange rate each month can not fail to have noticed that they are receiving less."


Agree with you, the shouting about Telmicro, Torresat etc etc will soon be replaced by squeals about the collapsed pound sterling.

[Drewth]

Very interesting discussion on the co.uk forum re the death of the Pound. Someone there reckons they've hedged their losses by buying US Dollars. They obviously haven't seen the collapse of Sterling against the Dollar either and will have done an awful deal.

On Bloomberg Channel, it looks as though UK may see drop in interest rates to half a percent. This will make the Pound drop even more. There is a chain of thought that if it drops at an average rate as seen over the past 18 months a Euro will cost £1.10 to purchase by February/March.

Thinking about it, I am sure that once Sterling pensions are paid at these dropping rates, we shall see some real problems out here as many businesses are struggling now and will do so even more when their Sterling based customers disappear.

I believe many poor souls took out mortgages in Euros. Wow, what a worry that must now be. Mortgages can be fixed etc. but exchange rates cannot.

A useful hint I read tonight. If your habit was, for example, to draw 100 Euros for the week (or multiples thereof) draw 90 Euros instead and make it last.

Obviously eating out will be cut back and people here will have to be more economical with their cars. I have noted that the cars are over used here but the N332 might become a lot quieter soon.

I bet Lidls see an increase in custom as well.

TV reception has dominated matters up to now. I bet it won't for much longer. People will not be able to afford to pay the outrageous sums being demanded by the suppliers.

[Chrisdee]

Que Sera Sera, we can't really do much about it.

[Drewth]

Have been watching this situation and the Pound is being sold off heavily, or being 'dumped' as one trader expertly put it.

Latest rates:

One Pound = 1.192 Euros
One Euro = 83.9 pence

Another record bad day for the Pound.

[Drewth]

Pound facing collapse v. Euro ?

Further drops in value of Pound Sterling today:

Pound = 1.214 Euro
Euro = 82.4p

many people will, of course, be blissfully unaware of this - until their UK Sterling payments, mostly pensions etc. arrive in their Spanish Banks.

Then, ouch, the pain !!!! This will surely badly impact on the economy here ?

Two economists now talking of and up Pound/Euro parity.

Pound Hits Record Low Against Euro, Falling To Just 1.21 Euro | Business | Sky News

[Tim]

When we bought our place in 2003 it was 1.60 and we got really peed off when it dropped to 1.54 for the remainder of the fees.

No telling where it might end and what pressures are being applied 'in high places' to engineer the drop - can only wait and hope,

regards, Tim.

[Drewth]

Pound v Euro: 1.223
Euro v Pound: .818

A record low for the Pound against the Euro and has dropped 20% in just over a year.

It made the BBC news last night:

BBC NEWS | UK | England | London | Weak pound luring euro shoppers

BBC - Today

Pound drops to record low against the euro - Telegraph

What is alarming is that some quite serious economists are now talking about Pound/Euro parity.

The Bank of England think its a good thing ! They obviously haven't consulted ex-pats on UK based incomes, many on pensions.

You know times are getting hard when Chinese Restaurants start to close and I see one at the Los Dolses centre above Mercadona/Lidls on OC has gone.

[Tim]

Well, that's cheered me up. Anybody got a bit of rope and a chair? Cheap rope please.
Tim

[John50]

Part 2 of a Nightmare in the Sun

The situation is exacerbated by the miasmic chaos of Spanish planning regulations. During the frenzied years of economic boom, many local town halls took advantage of the exploding demand for property by granting illegal building licences to raise extra revenue. But recent crackdowns by the regional and national governments have left several expats fearing for their homes.

In January, Len and Helen Prior's retirement villa in Vera was demolished for having supposedly been built on 'rustic' land. The couple, both 64 and originally from Berkshire, now squat in the workshop that used to adjoin their €500,000 home. 'It's hard to put into words when you see your property bulldozed,' says Len Prior, six months on and still involved in a protracted and costly legal dispute. 'All that was left was a slab of concrete. It was just terrible.'

There are many hundreds in similar predicaments. Robert Barlow, 69, sought all the relevant planning permission before building his home 16 years ago in a hilltop village near Bédar, Almería. He and his partner, Margery, lived there happily until three years ago, when they were informed to their astonishment that a developer planned to build on 33,000 sq metres of their land. The ensuing 28-day legal battle was ultimately successful, but it cost them dearly.

'I don't like to talk about money, but you can imagine how much it cost,' Barlow says, sitting in a cushioned wicker chair on a scenic veranda fringed by pink bougainvillea. 'Fiscally, I'm now naked. I fought through 1974 back in England when we had the three-day week, the miners' strike and I had debts up to my eyeballs. I can see we're on the verge of that sort of thing here.

'If you bought just recently at the top of the boom, you're in trouble. There's been a 30-40 per cent drop [in value]. Everyone has been too greedy - the buyers, the sellers, the town halls, the developers - and the sad thing is that the whole country has suffered through no fault of the average Spaniard.'

A couple of miles down the road from the Barlow house is a development village called El Pinar. It is reached by driving up a winding tarmac pathway in first gear, until the road gives way to a smattering of whitewashed houses built into the parched hillside. There are around 80 residents here, all of them British.

For years, the developers could barely build houses fast enough to meet demand. Now, 70 per cent of the properties lie unsold, lending the place an uneasy silence, like a ghost town abandoned by prospectors in a gold rush. There are 'for sale' signs nailed to garden railings on every street.

One of the residents, who does not want to be named, shows me around her immaculate three-bedroom house. The villa has four bathrooms, two dressing rooms, a whirlpool bath and a substantial swimming pool. It is on the market for just over €350,000, but there has been no interest for months.

'It's a beautiful house,' she says, wistfully. 'I look around sometimes and I think to myself, "Who wouldn't want to live here?" '

Perhaps swimming pools and whirlpool baths only go so far. With so many British expatriates losing their savings, their homes and their dreams, perhaps the more pertinent question is: who would?

[John50]

Spain: Dark days for Brits who sought a life in the sunIt

It was supposed to be paradise. Now the thousands of expats who flocked to Spain for its blue skies and low prices find themselves trapped by a crashing property market, a tumbling pound and bitter planning rows.

Anita Swann is sitting at a café table sipping a fizzy orange juice and feeling the warmth of the fading sun on her face. It was the thought of idyllic evenings such as this that first lured her to Spain. But three years later, she feels trapped.

'I hate it here,' Swann says, staring at her sparkly flip-flops. 'I'm in such a state that I can't see anything I like here any more. The ideal would be to sell up and go back to England. I get up every day and I think: "Oh my God, how did I end up here?" '

Three years ago, Swann sold her home in Bath, gave up her job working with social services and emigrated to Spain in search of a more comfortable life. She had just come through a painful divorce and, at 51, wanted to start afresh with her new partner.

At the time, property in Spain seemed a sure-fire investment: the market was booming and house prices had risen 270 per cent over the previous 10 years. It was one of the fastest-growing economies in Europe, fuelled by swaths of coastline construction.

Swann used the proceeds of her house sale in England and her divorce settlement to buy two holiday apartments in beachside resorts and one three-bedroom house with a shared pool. The total cost came to just under €600,000 (then worth about £400,000).

'I thought it would be a better life,' she says. 'I believed that I would find work and I'd been told that property was the best thing to buy.'

But now Swann is facing a very different future from the easy, sun-soaked lifestyle she had envisaged. A steep downturn in property prices, coupled with the weakening of the pound against the euro and a glut of unsold new-builds still flooding the market, has left her almost penniless. The value of her properties has fallen by about 16 per cent. The steepest drop has been on her beachside apartment in the popular tourist resort of Mojácar on the Costa Almería. Originally valued at €125,000, it is now thought to be worth around €85,000.

Unable to find work despite speaking good Spanish, Swann is now forced to meet the costs of her €3,000-a-month mortgage from her rapidly dwindling savings. Her homes are on the market but no one is buying.

'I'm having a nervous breakdown every single day,' she says. 'It's just snowballed. Two years ago, we might have got away with it, but now I'm losing money all the time. I've only got £5,000 left in my savings in the UK. I loved the sun when I first came out and taking trips out to sea in a boat. I suppose I did imagine it would be a bit of a holiday, but now I wish I'd never come.'

It is a disheartening story, but also a typical one. Up and down this stretch of coastline, from the overpopulated beaches of Benidorm in the Costa Blanca, through the nightmarish sprawl of Torrevieja to the manicured golfing greens of Marbella on the Costa del Sol, British expatriates are finding themselves stuck in a similar financial rut. Mortgages are being refused, homes are facing repossession and some expats find themselves sucked under by negative equity. Almost everyone you speak with, from the sunbather slicked with oil in the midday heat to the barman serving espressos in the town centre, knows someone who has been affected.

'It's really difficult and my mortgage is extortionate - the payments have more than doubled,' says Joanne Gower, 43, who moved from Lytham St Annes, in Lancashire, to a hilltop village development near Mojácar two and a half years ago. 'My house was originally valued at €408,000. It's on the market at €375,000 now, but there are no buyers and I'm prepared for it to take years to sell. Loads of people are trying to sell in the village. One lady couldn't survive any more on her pension, so she has gone back to England to work in an old-age home just to cover the mortgage.'

Over the years, one million Britons have settled in Spain, enticed by the cheaper cost of living, the perpetual sunshine and a reciprocal agreement with the UK that has, until recently, guaranteed them free healthcare. The locals called them 'steamers' - people who did everything under their own steam and asked for no handouts. Many were newly retired, putting their savings into the apparently cast-iron investment of bricks and mortar. Others wanted a better quality of life for their young families and hoped to integrate into the local communities, seeking work, schools and houses.

'The idea is that it's Shangri-la,' says Lenox Napier, the editor of a local newspaper based in Mojácar. 'We've worked hard all our lives and our reward is to live in a tranquil, safe, agreeable place. We don't want much in return - just sun and a few lizards. Until recently, Spain offered that.'

But, as with all dreams, there has been a stark wake-up call. The pound has fallen almost 12 per cent against the euro over the past year and the cost of living in Spain has soared. Basic foodstuffs - a bag of potatoes, a carton of milk - have almost doubled in price. Taxes have risen and it was announced last month that tens of thousands of Britons on the Costa Blanca will lose their right to free healthcare because the authorities claimed that elderly expats were putting too heavy a burden on the region's hospitals. Perhaps inevitably, the area has become known as 'Helldorado'.

'Forget about the Costa Blanca,' said one waggish pensioner who has been living here for four years. 'I'm more worried about the costa living. When I first came out here, you got around €1.40 for a pound. Now it's more like €1.25. I've noticed a fall in my pension of about €100 a month; that's down by about a quarter and, yes, it's a real struggle.'

Investors have scrambled out as fast as their budget flights could carry them. At the height of the boom, many expats were tempted to buy off-plan, putting down a 25 per cent deposit and selling the property for an increased value before completion. The practice, known as 'flipping on', has now gone horribly wrong.

'A lot of them are completely stuffed,' says Inez Rix, the co-director of Direct Auctions, a Marbella company that specialises in distress sales. 'One poor guy lost £86,000 buying off-plan because he couldn't raise the mortgage to complete. The property wasn't worth what he had agreed to pay.'

As a result, most new developments stand unsold and unoccupied along the beachfronts, each one an empty husk of high-rise concrete. The knock-on effect has been dramatic: not only is demand for cement at its lowest for 11 years, but several thousand labourers have lost their jobs and unemployment in Spain is expected to hit 10 per cent by the end of the year. Half of the country's 80,000 estate agents have already closed their doors.

Richard Zarb, 46, is one of the luckier ones. He set up the 1st Call Spanish Homes estate agency in Vera when he emigrated with his wife and three children five years ago from Gravesend, Kent. 'In this town alone, eight estate agents have closed in the last year,' he says, leaning back in his office chair while the air-conditioning unit hums softly in the background. 'I've had to cut down on €30,000 of expenses and I've lost two members of staff, but we're still getting inquiries - it's not all doom and gloom.'

Sales are down 50 per cent from this time last year, but he is at pains to point out that many expatriates continue to live here extremely happily. 'You're still getting a much better life out here than you would in England,' he says. 'My children [Jo, 16, Jack, 14, and Annie, 10] go to Spanish schools and speak the language like locals. We can allow them much more freedom than we ever would back home because it's safer and there's a real community atmosphere.

'With British expats, the main problem is that they come over and they don't click out of holiday mode. You have to learn the language. You have to work because you have bills here like anywhere else. I would never advise a family to come out here now. It's too hard, especially if you have kids.'

It is true that expat families out here are among the worst affected. Many do not wish to talk publicly in case their friends back home learn of their dire straits; others are simply too depressed by the escalating situation to admit it.

'We moved here when the real estate was booming, bought a house, put children into private school, at the time [money] was not an issue,' one anonymous expat posted on an internet blog. 'Although as they got older the fees ended up being €1,000 a month when some salaries are not even that! Now daughter gone back to UK to university, no money left to continue other child's education. Cannot sell house. Over 50 so struggling to get work ...

It's soul destroying, we came here for a better life and it has ended up in disaster... We are truly stuck, stressed out with limited funds.'