RICHARD BURTON AND HMRC

The actor Richard Burton who was born in Wales had lived in America for 27 years and died in 1984 at his Alpine retreat near Geneva, where he was buried.

Where are you domiciled?

As a foreign national living in Italy for many years I find it sometimes confusing to look at where you come from and know where you belong.   

THOUGHTS ON THE BRITISH POUND

Using long term macroeconomic data, sterling looks to be significantly undervalued versus the euro (see graph ). Without Brexit, we could be looking at, what we call, an ‘equilibrium’ value of around 1.50 euros to the pound, taking into account economic fundamentals only (relative prices, relative productivity and relative expected savings). 

Assuming Brexit, we’re working on the basis of circa €1.3 to £1 - but it could take a number of years to get there!

Productivity is a key driver of our data used in this calculation – particularly productivity in the tradable goods sectors. This is likely to suffer after Brexit due to non-tariff barriers to trade (think complying with overseas regulation and customs regimes). That said productivity growth in Europe has been weak, and is unlikely to surge ahead while the UK economy recalibrates, somewhat limiting the damage to the equilibrium rate. If the European project revives around a new Macron/Merkel nexus, then further gains from integration may lower the equilibrium rate a little further via improving Eurozone productivity. 

 
Although the long-run economic value of the pound would shift lower in a ‘hard Brexit’ scenario (i.e. no special deal), primarily due to the impact on productivity, the actual exchange rate is so far below the economic equilibrium value that we expect the pound to rise on a long-term basis in any scenario. It is really just a question of speed. 

Unfortunately, such long-term analysis does not help us forecast currencies on a 6-12 month view, and the newspaper headlines generated by ongoing Brexit negotiations could well drive exchange rate volatility. 

  

Until June, the EUR/GBP exchange rate over the last couple of years has closely tracked changes in relative interest rate expectations (i.e. what the market thinks interest rates will be in Europe in 3 years' time relative to what they think they will be in the UK). This lends some shorter-term support to the pound, and indeed could favour sterling further if the run of strong data in the Eurozone starts to decline.

 

If you want to review your portfolio returns over the last year/s with an eye on the impact of currency fluctuations and how this might affect your income and expected returns then you can contact me on gareth.horsfall@spectrum-ifa.com or call me on 3336492356

CURRENCIES

This week I want to dedicate my blog to the currency of living abroad. 

How to be Compliant...

What an interesting couple of weeks. Organising a protest in Firenze to fight for the protection of citizens’ rights in the EU, being interviewed across multiple news channels around the world and being joined by about 100 people who turned up on the day and got an equal amount of press attention. And now, to slip back into normal life again and a work/life pattern. It all seems a little surreal. 

My Italian Citizenship Application

Well, for those of you who have been asking me for a long time whether I would apply for Italian citizenship, I can now tell you that I have made the application. (The photo above is not a photo of my passport, that is a long way off yet).

To Declare or not to Decalre?

That was the question of the summer 2017!

Selling a UK Property

Selling a UK Property

I was asked recently about a little  known UK property tax break which I revealed some time ago and thought I would repeat it again here:

Creative Destruction

It has been noted by a number of you that it has been some time since my last blog and that in 2017 they have been few and far between. You would be right. 

The Rule of 72

Carrying on the theme about inflation, I thought I would introduce you to a little known calculation to help you work out the corrosive effects of inflation on your money. 

Inflation - Are you prepared?

I'm back after a brief time away from my blogs. I am sorry if you have missed me! Work and Brexit has been keeping me busy but that is no excuse, so onto the topic of this blog: Inflation.

What's next for GBP versus EUR

 

Whatever you think about Brexit and the effects it is having and the effects it will have I can't think of a more sudden and bigger impact on most people’s lives than the depreciation of Sterling.

BRITISH IN ITALY

As you may already be aware I am now a part of the group called 'British in Italy' which has been set up to protect and fight for the rights of Italian citizens living in the UK and UK citizens living in the EU.   

UK PUBLIC SECTOR PENSIONS, BREXIT AND ITALIAN CITIZENSHIP

I was watching a nature documentary with my son the other day and we were watching the foraging activities of grizzly bears in North America.  

Trump Twitter and China

 A reference to Donald Trump at this time seems inevitable.  Whatever you might think about him he is excellent news material. 

Thinking about taxes?

It has been a whirlwind few weeks for me after appearing at the House of Commons UK Exiting the EU committee in January.  Since then I have given a speech in Castiglione del Lago to over 80 UK Nationals who wanted to hear about the proceedings and also been involved with a number of initiatives that have been going on in Italy and around Europe.  

What a difference a few weeks can make in someone's life!  

House of Commons UK Exiting the EU Committee

January is normally a month in which I struggle to find any new and interesting information to write about. However, something interesting has happened in the last few days.