Advice for Relocating Overseas During a Global Financial Downturn

Chase Buchanan Wealth Management, the expat financial advice experts, provide some thoughts and advice for people considering moving abroad during a financial downturn

Advice for Relocating Overseas During a Global Financial Downturn

Inflation and the threat of potential recession have been a key theme for most international economies over recent months, driven by scarcity, slow recoveries from the pandemic, and worldwide events such as the conflict in Ukraine.

While the economy in your intended relocation destination may not have an immediate impact on your decisions about whether to move abroad, it may well affect the timing – and how your financial planning needs to change to adjust for changes such as currency exchange rates.

This article from Chase Buchanan Wealth Management, the expat financial advice experts, provides some points for consideration and guidance when moving abroad to help ensure your move goes to plan, with a full understanding of how an economic downturn may influence your plans.

How Do Economics Impact Expats Moving to a New Country?

One of the first things to evaluate before making any firm decision is the cost of living in any new destination. Inflation and sustained high-interest rates mean, in most regions, everyday expenses cost more, and the interest rates associated with borrowing are significantly higher.

In some scenarios, this may have little consequence, particularly for high-net-worth individuals and affluent families without any financial pressures. However, we would always recommend assessing your expectations in terms of property ownership, income and lifestyle to verify that your budget is more than sufficient – including any outgoings that have risen over recent months.

Globally, high-interest rates are generally seen as a negative. Still, conversely, they may mean that prospective expats with healthy investment portfolios and savings products have a greater expendable income and, therefore, are in a better financial position to relocate than previously.

Inflation has affected different countries in very different ways, so appraising how this might affect your budgets is important – for example:

• Across the EU, inflation is currently at a 4.9% average, less than half the 10.9% inflation rate recorded in 2022.
• In Canada, the inflation rate is now 3.8%, also a significant improvement from last year when price rises hit just under 7%.
• Inflation in the US is at 3.7%, a slight increase from the previous month but also under half the peak inflation in 2022, which reached 8.2%.

An interesting point to note is that these metrics - while comparing only a few regions popular with expats - is that all are experiencing less severe inflation than the UK economy. Currently, British inflation is at around 6.7%, down from a peak of over 10%.

Therefore, if you have felt very little effect or found that your finances easily cover these increases in everyday living costs, you may discover that a relocation leaves you financially better off, where price rises, and interest rates are lower.

How to Plan Your Relocation in Light of Inflation

Understanding every aspect of your finances, income streams, and outgoings is necessary since much depends on whether you intend to look for employment after your move, need to budget for education fees for children, and how much wiggle room is built into your contingency plans.

Most expats who relocate to take up a career opportunity already have a confirmed position waiting for them – in line with the eligibility criteria and rules for the majority of visa categories and work permits that allow foreign nationals to work.

Otherwise, you may need to look into the employment market to determine whether there are high or low unemployment figures, demand for professionals with your qualifications and skill set, or whether the economic downturn has had a significant influence on the sector or industry you expect to work in.

Expats relocating in retirement won’t have this area to consider but will still need to perform detailed calculations to check what their real-world pension income will be. This figure may be affected by exchange rates, tax treatments, and whether you plan to transfer your pension to an overseas scheme or will be receiving a foreign source income.

If you own a business, are self-employed, expect to set up a new business abroad or are reliant on earnings from a business interest, it is equally essential you research the sector of trade to see whether this is stable or exposed to potential volatility.

Demand for some services and goods varies significantly between countries, so any business plan should be supported by in-depth knowledge about whether there are sufficient opportunities to sustain your anticipated income.

Pros and Cons of Relocating Overseas in a Challenging Economic Climate

The reality is that an international relocation always has an element of uncertainty since the transition can be significant, from learning a new language to becoming accustomed to a different culture, enrolling children in a local or international school and navigating alternative property investment processes.

Embarking on your move armed with all the information available is undoubtedly the right way forward so you can assess how the current climate will impact you – if at all.

As a summary of some of the factors to consider:

• Inflation generally decreases the value of money, meaning your income, assets and cash reserves may become worth less than when compiling original budgets. That said, if your budgets are fully up to date, these may remain accurate and realistic.
• Living costs have increased in most regions, but the inflation rates in several parts of the world remain lower than those in the UK – while we advise caution when markets or economies are uncertain, you may find greater stability in another country.
• Property purchase costs may potentially be higher due to appreciation. That may, though, mean that a property you intend to sell in your home country is equally more valuable. Lower-priced property markets present an excellent opportunity to buy a larger home or a property in a prestigious area with a more significant budget.
• Borrowing costs are higher across the board due to higher central bank base rates. The outcome for investors may mean that your returns are greater or that stocks carry a higher market valuation.

Every expatriate and family is different, and so although the typical outlook might be to avoid a relocation during any period of upheaval, there are an equally compelling number of possible advantages that will help you afford a more comfortable lifestyle than you may have planned.

Our advice is to work through every consideration in detail, compile accurate budgets based on current living costs, and conduct research into investment markets, business sectors or employment environments that will have a tangible impact on your plans.

For more information about the global economy or the challenges and opportunities for expats in your chosen region, please get in touch with your nearest Chase Buchanan office.

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About Chase Buchanan Private Wealth Management

Chase Buchanan is a highly regulated wealth management company that specialises in providing global finance solutions for those with a global lifestyle. We are global financial advisers, supporting expatriates around the world from our regulated European headquarters, and local offices across Belgium, Canada, Canary Islands, Cyprus, France, Malta, Portugal, Spain, UK and the USA.

Chase Buchanan Ltd is authorised and regulated by the Cyprus Securities and Exchange Commission with CIF Licence 287/15.

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