There are very few countries that were not hit by the global financial crisis that took us all by surprise around September 2008, but the experiences of expats in France highlight the impact of the recession on their new lives.
Shorter Recession in France
France officially came out of recession six months before the UK, with French April – June 2009 figures showing a 0.3% growth, meaning that France was only actually in recession for one year.
Experts love to thrash back and forth with theories on why certain countries had better or worse experiences of the recession, but it is widely accepted that the countries with a greater reliance on personal debt, the property market and the financial sector fell harder and quicker than other countries.
Property Market in France
France does not have the same cultural obsession with home ownership as is commonplace in the UK, so not only do fewer people own their own homes, there is a very flat buy to let market. Given that the property boom in the UK played a huge role in the banking sector crash, as sub-prime mortgages were re-packaged and sold on as ‘gold standard’ investments, the banking sector in France was not so exposed to toxic debt. Of course, France does not have the same reputation for financial services as the UK, either, which has been positive in this situation.
Income for Expats
For many expats, the main impact of the recession was felt in the collapse of the pound against the euro, giving near-parity for many months that is only just starting to recover. For many expats that either rely on UK income or a UK pension, this essentially gave a 25 – 30% reduction in their income. This was particularly difficult for those that have a fixed income, such as pensioners and people employed by UK companies. With many expats renovating homes, that drop in income meant that many renovation projects were put on hold, so not only did the previously-buoyant expat to expat housing market all but dry up, for many British expat trades people that relied on other expats in France for their income, such as builders, electricians and plumbers, their income dropped significantly too.
The Fall of the Euro
During the recession and the following months where we are steadily coming out of recession, the spending power of expats still remains pretty low, with the pound recovering slightly to around €1.13 in March. This is still nowhere near the 2007 highs of €1.45, or even the €1.65 seen previously, but it does mean that life is getting a little easier for expats.
Car Scrappage Scheme
The French government adopted similar car scrappage schemes as was introduced in the UK, but with car production still a booming business in France, buying French and not relying on imports is a cultural benefit that has certainly helped the country recover quicker. People in France are keen to buy locally as much as possible, and certainly prefer to buy French, which has also helped maintain the domestic market.
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NewLifeInFrance - 21-Oct-11 @ 2:17 PM
This is a brilliant website with very clear, varied and detailed information - more so than many I've seen.
What a pity, therefore, that it hasn't been up-dated for 18 months!
What chance is there that this might be done in the near future - or should I take the site off my 'Bookmarks' list?