Europe Less Favourable For Expat Finances
Tuesday, September 07, 2010

The United Kingdom and some continental European countries have been revealed as some of the least favourable locations for expat finances, according to the latest findings from HSBC Bank International's Expat Explorer survey, the largest global survey of expats.

Expat Economics, the first report from the 2010 study, found that the UK, Belgium, Spain, France, Germany and the Netherlands were the worst performing locations when it came to overall wealth, with lower annual salaries, reduced levels of disposable income and fewer expats owning luxurious items.

Now in its third year, Expat Explorer surveyed more than 4,100 expats from over 100 countries, an increase of close to 1,000 additional respondents on 2009 making it once again the largest global survey of its kind. Expat Economics rankings feature 25 countries in 2010, determining each location's economic score based on three main elements:

• Annual income in excess of USD200,000;
• Monthly disposable income in excess of USD3,000; and
• A measure of defined luxuries (such as owning either a swimming pool, more than one property, a boat/yacht, or going on more luxurious holidays).

Lisa Wood, Head of Customer Propositions at HSBC Bank International, said that the wealth gap was widening between the east and west, with expats in emerging economies leaving their counterparts in the Eurozone behind:

"It is clear that the economic volatility that has plagued the UK and Eurozone has had a significant effect on expat finances since 2009."

"The report has revealed that these countries were the worst performing when looking at purely financial criteria and it was here that we found a significant proportion of expats who had noticed a deterioration in their respective country's economies. Not surprisingly, a number of expats in these economies are actively looking to return home."

Almost half (47%) of all expats surveyed believed that the economy in their current country has deteriorated since the start of 2009. Reflecting the turmoil experienced in the Eurozone, a larger number of expats based in Spain (93%), Belgium (60%), France (60%) and the United Kingdom (67%) also agreed with this statement.

This was in contrast to the economies that have escaped the worst of the economic downturn, with a smaller number of expats living in the emerging nations of Russia (45%), India (16%) and China (9%) feeling negative about their respective host economies.

Nearly one third (29%) of UK-based expats said there have been reduced career opportunities and 31% say they are having to monitor their expenditure more closely, something that has become increasingly important due to the increased cost of living that UK-based expats are faced with. Over half of UK-based expats agreed that the cost of living was considerably higher than in their home country, with bigger spending on most items except healthcare.

In the report, mainland Europe dominates the bottom five positions on the league table. Almost two-thirds (62%) of surveyed expats living in Spain earn below USD60,000, as do almost half of the expats living in France (47%) the Netherlands (47%) and Germany (45%). This is much higher than the global average of only one quarter (26%) of expats who earn less than USD60,000 and can largely be explained by the high number of expats who choose mainland Europe as a retirement destination.

Conversely, expats in Russia remain the wealthiest in the world, with over one-third (36%) of those surveyed earning over USD250,000. Both Singapore (32%) and Bermuda (27%) also have a much higher proportion of expats with an annual income of over USD250,000, significantly higher than the world average of 13%.

Overall, the report revealed that only one in twenty (5%) expats were accumulating more debt and that expats are still saving a greater amount whilst working abroad, with one in five (20%) able to pay off more debt than when they lived in their home country.

Despite this, the report revealed that the UK was home to the highest number of expats who were accumulating more debt (11%) followed by Australia (9%), despite the fact that many expats in these countries are also able to save more than in their home nation (53% and 51% respectively). Spain (29%) and France (36%) have a much smaller percentage of expats saving more than in their home nation, however this is likely to be due to the larger number of retirees amongst this population.

"Whilst we have seen a different and somewhat negative picture in the UK and Europe when compared to the rest of the world, it's important to remember that expats in these countries are still managing to earn and save more that they did in their home country," Wood added.

"As expats tend to be more affected by economic events, it will be interesting to see how migration patterns continue to change as the global economy continues to undergo a period of recovery,” she concluded.