Daily Management Review

British retirees are leaving Europe


For decades, the warm sun, low cost of living and good food attracted British retirees to continental Europe. It is difficult to name the exact figure, but the UK Ministry of Labor and Pensions claims that about 340,000 permanently residing in the EU citizens of the United Kingdom receive British pensions (this figure does not include Ireland, where there are another 135,000 people).

Pedro Ribeiro Simões via flickr
Pedro Ribeiro Simões via flickr
Many have settled in popular cities on the shores of the Mediterranean Sea, such as Quesada (the Spanish coast of Costa Blanca). They say that you could buy a small house for only a few thousand pounds in the late 1980s.

However, in recent years, despite the aging population, the growth of number of British retirees in Europe is rapidly falling.

In 2005, the number of people receiving British pensions in the four main continental countries (France, Italy, Spain and Germany) increased by 8%. By 2010, these rates slowed to 4.8%, and were only 0.9% in the last year.

Other figures also indicate a slowdown. If the current trend continues, then 2018 may be the year when the number of British pensioners on the continent will begin to decline.

Economic factors are the main cause of the fall. In the boom years, since the mid-1990s to 2007, the strong British economy and the strong pound allowed older people to move abroad and "live a life that was previously only available to the stars," recalls Andy Bridge, head of Place in the Sun company.

Then the economies of the entire Mediterranean strongly sank, which led to the collapse of the local real estate market. Since 2008, the average price of a house in Spain has fallen by a third. Concrete skeletons of unfinished buildings are still scattered all over the southern coast of the country as a reminder of projects abandoned during the crisis.

Many British expats found themselves with a negative difference between the amount of collateral and the market value of the property and could not went back home (a bad advertisement for those wishing to move to Europe).

In addition, the weak European economy was difficult to call a tempting prospect for those who wanted to continue working part-time. On the Costa Blanca, many British retirees began to work part-time, some unofficially, after it became clear that their savings are no longer sufficient for a comfortable life, says local Scottish resident Andy Ormiston.

Changes in the British economy are also having an impact. The rise in property prices forces young people to live with their parents after completing their studies. According to the Office of National Statistics, 26% of citizens between the ages of 20 and 34 live with their parents today, compared with 21% in 1996.

This also affects the financial capabilities of their parents, The Economist reports.

In the years after the financial crisis, the British have become more cautious about moving abroad. "Today we have more informed buyers who understand better what they want, what they can afford and why they want to move abroad," says Bridge.

Brexit has not yet had a dramatic effect on the migration of pensioners. On the one hand, some of them postponed the move because of the weakening of the pound, which today stands 14% less against the euro than the day before the referendum in 2016.

On the other hand, some people have postponed the decision on a possible migration to the future, in order to understand what the system will be after the UK's withdrawal from the EU, explains Roger Bowden, representative of France-based public organization Expat Citizen Rights.

The long-term effect can be more pronounced. Much depends on the British negotiations with the EU on Brexit. Preliminarily approved on December 15, the agreement guarantees British expats the right to remain in Europe.

Nevertheless, pensioners, who before had not seen any special reason to keep all the documents, may face the problem of proving their long residence in Europe.

The report of the Institute for Migration Policy of Europe predicts that "no matter what happens with the agreement on the rights of citizens, the probability of an increase in the number of British citizens caught in an illegal situation is likely."

It is possible that many will not have necessary documents and with limited access to services, which will force them to massively return to the UK, the author of the report Megan Benton.

Meanwhile, local residents of Spanish cities do not particularly worry about the possible decrease in the number of permanently resident Britons, as they do not doubt that other Europeans will take their place.

source: economist.com