The pound was placed on the defensive again on Thursday, amid concerns the UK may be at risk of a credit rating downgrade.
Is your expat lifestyle still strong and stable after the UK general election?
As June came to an end Theresa May certainly wasn’t in the position she expected to be in at the beginning of the month. Like many leaders before her, she called a snap general election to take advantage of her strong lead over the opposition in the opinion polls. She wanted to emerge from the election with a greater majority, giving her the ‘strength and stability’ to get on with Brexit on her own terms.
It’s safe to say the plan somewhat backfired, and (as you might expect) this political misstep comes with consequences.
What are they, and how do they affect you as a UK expat?
How do I know my rights from wrongs?
If you’re living in the EU, the general election obviously has a much greater bearing on your future than it does for UK expats in other areas of the globe.
Brexit Secretary David Davis quickly caved in to the EU’s demands that issues like citizens’ rights be discussed before trade deals are touched upon. As an expat, this is a good thing for you, as it means you’ll have less time to wait before discovering whether your right to remain in your adopted nation is safe.
Both sides have intimated that they expect a reciprocal agreement to be formed. So if the UK is generous with its offer, you can probably relax. The EU did recently torpedo the UK’s opening gambit on EU citizens’ rights, but that didn’t cause too much concern. We all know no one ever starts with their best offer (that’s why DFS sofas go from £999 to £699 before being sold for £399) so the next UK proposal should be more in line with expectations.
The chances are, your residency rights are going to be secured. The EU doesn’t want its citizens thrown out of the UK, so it has a strong incentive to look after you. Additionally, if the UK were to opt for a ‘Soft Brexit’ (as many are suggesting will happen following the bruising election) there is a chance it might have to agree to some form of free movement, which may see you still able to enjoy all the current benefits of living in the EU.
The $64,000 question just got more expensive
What about your money? While residency rights for EU expats are one of the most obvious issues surrounding the impact of the general election on UK residents living overseas, those residing in countries outside the EU unfortunately haven’t escaped the fallout from the unexpected outcome either. You probably won’t be surprised to learn that the pound has been left weaker after the election, and the decline in GBP exchange rates makes currency transfers from the UK that bit costlier.
Initially, GBP/EUR plunged over one-and-a-half cents and GBP/USD fell over three cents once it became clear that the UK had ended up with a hung parliament. Sterling has recovered somewhat against both currencies (but not by much) and was trading around €1.1355 and US$1.2737 towards the close of June.
This means every £10,000 sent overseas is worth roughly €237 or US$218 less than if you had made the transfer at sterling’s pre-election peak. That quickly adds up.
It’s an even worse story against the commodity currencies as sterling has largely continued falling against the Australian dollar, New Zealand dollar and Canadian dollar since the election. Whether you’re taking digeridoo lessons, going Peter Jackson spotting, or herding moose, your money simply won’t stretch as far now thanks to the election.
The fallout from the June 2017 general election is likely to continue being felt for some time to come, with any dramatic twists to the tale having the potential to turn things on their head. Stay up to date with the latest news to make sure you’re prepared for any developments.
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)