UK has dropped 81 places in the Cost of Living ranking since the Brexit referendum. Weakened GBP post-referendum makes UK one of cheapest countries in Europe for international employees and travelers. Contributor Steven Kilfedder, Production Manager – ECA International.
London is now one of the cheapest major cities in Europe for overseas workers since the Brexit referendum, currently ranking 127th in its Cost of Living report. As a result of the weakened GBP since the Brexit referendum, the cost of living in UK cities* is far lower than many in Europe such as in France, Germany and Belgium. Those coming in from the US will also find the cost of living much cheaper in the UK thanks to the strength of the US dollar in comparison to the post-referendum pound.
Brexit effect on UK cost of living
Steven Kilfedder, Production Manager for ECA International, said: “The cost of living in the UK has dropped significantly for overseas workers and visitors since the referendum along with the value of the pound. With the UK’s leave date fast approaching, all that can be certain is there will be more fluctuation in inflation and exchange rates as the nature of future relationships becomes clearer.”
The UK has dropped 81 places since the Brexit referendum according to ECA’s Cost of Living report which compares a basket of like-for-like consumer goods such as groceries, meats and vegetables, and essential household goods. ECA’s Cost of Living report analyses a basket of goods and services commonly purchased by international assignees in 479 locations worldwide. The survey allows businesses to ensure that their employees’ spending power is maintained when they are sent on international assignments. ECA International has been conducting research into cost of living for over 45 years.
“Just last week the GB pound dropped to a 20-month low then rose again by the end of the week thanks to political turmoil, demonstrating the economic rollercoaster that the UK is facing right now. Fluctuating exchange rates can have a huge impact on the cost of living for international assignees depending on how they are paid. Companies should have plans in place for countries going through a turbulent period to ensure their staff are not affected. Until a Brexit deal is made, we will not have a clear idea on what this will mean for the UK’s cost of living ranking against other major financial hubs,” continued Kilfedder.
US overtakes many European cities in the cost of living rankings
24 European cities have dropped in the cost of living rankings, partly due to the strength of the USD against the weakened Euro. European countries that have maintained their position at the top include Switzerland (four of the top five most expensive cities in the world), Norway (Oslo 9th, Stavanger 10th) and Denmark (Copenhagen 16th).
Kilfedder explained: “The euro has weakened recently as the EU faces slow levels of growth, the phasing out of quantitative easing, as well as challenges from Italy on the budget rules for 2019. However, the booming US economy and rising interest rates has caused every US city in the report to jump up the rankings, meaning many European cities have been pushed down in comparison. This is good news for those travelling from the US, but many Europeans relocating to the States will find it more costly.”
Four US cities have re-entered the Top 100 most expensive in the world, bringing it up to 17 cities in total. Miami, New Jersey, Baltimore and St Louis have jumped by 26 places on average. The cost of living in countries pegged to the USD, such as Hong Kong and some Middle Eastern countries, has also increased due to the strength of the USD.
Australia and New Zealand more affordable for British expats
The cost of living for overseas workers in Australia and New Zealand has plummeted since 2017, with every Australasian location included in the survey dropping at least 20 places. Although cities in these countries are still more expensive than in the UK, the cost of living gap has narrowed in the past year. Sydney and Canberra both fell out of the top 50 and now sit in 70th and 85th respectively, whilst Adelaide was the city to fall the most places – going from the 64th most expensive location to 111th in the space of a year. According to ECA’s report, petrol is an example of an item that is much cheaper in Sydney compared to London, costing 46p less per litre (96p compared to £1.42).
Kilfedder explained “Both the Australian and New Zealand dollar experienced difficulties over the past year and were outperformed by a number of other regional and global currencies. This is good news for UK residents living and working in these two nations however, as they have become much less expensive overall.”
The UAE leads a rise in the rankings for Middle Eastern countries
The cost of living in the majority of cities in the Middle East has increased, with the exception of Tehran in Iran. Manama in Bahrain has also re-entered to top 100, while Dubai, once considered a highly affordable business haven for UK workers has entered the top 50 for the first time**.
“The introduction of a five percent VAT in the UAE has pushed up the average price of goods and services in Dubai and Abu Dhabi. This, combined with the fact that its currency is pegged to the US dollar which has been strong in the last year has caused the cost of living for many overseas workers to jump. In the past five years these UAE cities have jumped by 125 and 128 places in the rankings, with Dubai now in 49th place and Abu Dhabi at 54th,” explained Kilfedder.
Swiss cities make up four of the top five most expensive in the world
Geneva (2nd), Zurich (3rd), Basel (4th) and Bern (5th) all continue to demonstrate that Switzerland is one of the most expensive countries in the world, with the four Swiss cities maintaining a steady record of being within the top ten most expensive in the world for the past five years. A cup of coffee in Geneva for example costs £4.73, over £2 more than in central London (£2.71).
Kilfedder explained, “The four Swiss cities in our rankings have been among the top ten most expensive in the world for years despite very low or negative inflation for much of the time. A strong currency and particularly high prices for food are among the reasons why the country is so expensive for foreigners. However, despite the high prices, high salaries in the country mean locals are still well-off compared to their European counterparts.”