UK rate cut heaps more pain on retired expats in Europe

Published:  5 Aug at 6 PM
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Thursday’s Bank of England rate cut to 0.25 per cent is yet another blow for retired expats in EU member states.

Following the continuing impact on currency exchange rates post-Brexit, the Bank of England’s decision to cut base rates to 0.25 per cent is a further blow to retired British pensioners living in Europe. Most have endured years of low returns and are now faced with significant shortfalls in their monthly budgets.

Financial firms are describing the cut as a painful disaster which will hit at least a million retired Brits overseas. The majority of retired expats base their living costs on a combination of pensions and savings, both of which will be hit by the rate change, making life in their chosen countries more expensive.

The financial industry believes there will be little annuity term improvement via base rates in the foreseeable future, and the BoE’s reintroduction of quantitative easing is unlikely to follow the model assessed by the bank’s Monetary Policy Committee. As regards the so-called limited impact on pension funds of declines in yields, the industry considers this assessment to be ‘courageous’. This, according to experts, is not the time to lock into an annuity.

UK pensioners in Spain are already feeling the Brexit effect on the pound sterling, with pensions dropping by as much as hundreds of euros every month. For those attempting to manage on the measly UK state pension, the percentage drop is making life very difficult, with a number of posters on the Bremain in Spain Facebook page reporting losses of up to 533 euros a months due to currency instability.

A majority of those worst affected would have voted Remain had they not been subject to the 15-year rule, and are angry that such a life-changing issue was beyond their ability to have their say. The lack of governmental forward planning to cover the effects of an unexpected Leave vote is causing anger amongst long-stay expats along Spain’s Mediterranean coastline, with newly-formed protest and support groups attracting negative comments about the British government’s lack of concern.
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