Sterling Blow For Expats As Pound Set To Stay Low

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The bad news for British expats is the pound is likely to stay low for years to come, slashing their spending power and making the cost of living more expensive overseas.

Investment managers at a $1 trillion fund believe the pound will languish against other major currencies for years.

His will make visiting and living abroad costlier for expats – especially in the US and Europe, where the currencies are much stronger than the pound.

A weak pound is good for British exports and a boost for the Treasury as most FTSE firms earn the bulk of their profits overseas.

Bigger tax take

These big profits mean more corporation tax flowing into government coffers.

But for expats eking out a meagre pension overseas, the picture is different as they have to wait longer for the state pension and in most countries outside Europe, forsake index-linking to keep the value of their pension in step with inflation.

Number crunchers at Northern Trust Asset Management have announced a five-year forecast for the UK economy.

“We are not necessarily expecting a significantly appreciative pound,” said Wayne Bowers, the US firm’s chief executive and chief investment officer for the European, African and Asia-Pacific.

Brexit puts pound under pressure

“In Brexit negotiations, we think the pound will be under pressure. It is very difficult to see in the next couple of years any reason why you would want to build a positive position in the pound. We think the pound will follow a trajectory that is flat to down.”

Although Brexit is likely to knock the UK economy back, the trust sees this as a blip rather than a trend.

“There are reasons why you’d want to own UK stocks – you want to take advantage of export-driven growth, the level of innovation created in the UK, the low level of corporation tax rates, the re-domiciliation of corporate activity into the UK which we think will continue,” said Bowers.

He also explained international investors were ring-fencing their UK holdings in case they wanted to reconsider their exposure to European Union investment levels

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