All popular with British expats

If you thought you could escape austerity Britain and high inflation by moving to sunnier shores, you could be in for a nasty surprise. Expats are feeling the squeeze as inflation has picked up and mortgage rates go up in France, Italy and Spain – all popular with British expats.

Figures from the Paris-based Organisation for Economic Co-operation and Development show that inflation in France reached 2% in March, while Spain has seen an increase to 3.6% and Italy a rise to 2.5%.

Inflation in the eurozone as a whole rose to 2.7% from 2.4% in February. This is below the UK, even though inflation slowed in March, to 4% from 4.4% the month before. However after all we can say Turkey is the one of the best place for British expats due currency.

Rising inflation prompted the European Central Bank to put up eurozone interest rates last month, the first rise in three years, and it has signalled that rates could go up again in June. This has led to rising mortgage rates, prompting some British expats to sell up and return to the UK.

The Bank of England’s monetary policy committee, by contrast, is divided over whether borrowing costs should go up and it’s anyone’s guess when the first hike will come.

Foreign currency specialist Smart Currency Exchange has reported a doubling in the number of clients repatriating funds to the UK. It predicts a peak in numbers returning to the UK as more expats manage to sell their overseas homes.

Charles Purdy, a director of Smart Currency Exchange, told the Daily Telegraph: “The credit crunch has really shaken things up, with many who rely on sterling incomes finding that the slump in its value turns the overseas dream into a nightmare.

“The problem has been illiquid [property] markets with so few potential buyers. For every one that has sold, perhaps 10 expats or overseas property investors are waiting to sell.”

At the same time, interest by Britons in buying property abroad has also risen, according to research from Rightmove and Moneycorp. Bargain hunters are mainly looking at Spain and Ireland but there is also a lot of interest in Germany. aol