Falling pound panics expats

photofontPattaya’s 5,000 British retirees and other long-term visa holders are digesting the stark reality that the pound sterling is in virtual freefall. The currency has lost 20 percent of its value, now a 30-year low against the US dollar, after the UK Brexit referendum in June mandated the country pull out of the European Union. Many foreign exchange dealers are now predicting a pound-euro parity before the end of the year.

Whilst the trend is good news for British exports, since they are cheaper when priced abroad, it is catastrophic for those who are using pounds to purchase foreign holidays or are living abroad on limited incomes from UK. A weak pound will also result in higher prices in the UK itself as the costs of imported goods like food, petrol and electrical items becomes more expensive.

Pattaya expat Leonard King, aged 70, is typical of those elderly Brits who are feeling the pinch. “Because of the currency fall, my monthly pension is now worth about 45,000 baht which I can’t live on. Luckily, I have some reserves in a UK bank account to draw on, but they won’t last indefinitely.” Like many others, he is worried that he won’t have enough income to qualify for his annual retirement visa next March. Immigration rules require retirees to have 800,000 baht either in proven income or in a Thai bank account, or in a combination of both.

Applicants claiming income in UK must obtain a “pension letter” from the British embassy in Bangkok and are required to submit proof in the form of bank statements or other financial data. Pensioner Carl Ferguson said, “If you happen to be an American or an Australian, you are not required to provide documentary evidence by those embassies, so it does seem bizarre that the British are out of step.” Carl also complained that the cost of providing the letter has now risen to 2,700 baht. The British embassy confirmed that it does require some financial data, at the applicant’s discretion, but stressed that officers never alter the yearly income claimed by the expat. He added that consular fees are set worldwide in London, a process over which the embassy has no control.

Pattaya Today conducted a straw poll amongst 20 retired Brits of whom 15 said they were deeply concerned about the pound’s decline. Several claimed they were considering going back permanently to UK, although this solution was feasible only for those with relatives or friends who were willing to provide accommodation, or for those who still maintained a UK property. Barry Kenyon, a former British embassy officer, said, “It is not easy these days for expats to resume life in the UK, and have access to services like the National Health, unless they have financial independence and a home base.” He added that some Pattaya expats were exploring other types of one-year visas including a marriage visa (for those married to Thais) or an education visa (for those wanting to learn Thai late in life) as neither of these required proof of 800,000 baht.

Although many expats are hoping the fall in the pound will prove to be temporary, this is far from certain. Indeed, some financial analysts are not ruling out pound-US dollar parity in early 2017. They say that a major problem is the uncertainty created by the British delay in actually declaring an exit, by triggering article 50 of the Lisbon treaty, and the fear that the negotiations could drag on for years. The only time that the pound plummeted to one dollar was in the mid-1980s and that triggered an economic recession in UK.

A number of Pattaya-based expats have already moved to Cambodia or are considering doing so. Although Cambodia has a much more open immigration policy than Thailand and is cheaper in many respects, there are downsides to living in Phnom Penh or Siem Reap. There is no public transport and medical facilities are not always of a good standard. Moreover, English pounds have to be converted to US dollars. The most likely outcome for most Pattaya-based expats is that they will hunker down, spend less on non-essentials and wait for a pound recovery, whenever that is.

A British bar owner in the Walking Street area concluded, “I’m not too worried. Customers had already started drinking less because of the police crackdown on over-the-limit driving. The pound situation is just one more worry to add to my list.”

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