4 October 2008

Inflation – The Pensioner’s Nemesis

I was reading today that food prices in France have risen by 6.6% this year which means that by Jan 1st 2009, they will probably have gone up even further. I know that this is not just a French problem  because prices in the UK have gone up by at least this amount. I never used to bother too much about inflation because when you were employed and you kept your nose clean, brought in the business and didn't insult your boss, you generally got a pay rise roughly in line with the inflation rate, so although you weren’t any better off at least you weren't any worse off. 

Now I’m a pensioner (only because I took my BT pension early I hasten to add), things are different. OK the BT pension is raised each year but probably not by 6.6%. My other pension (a BT AVC) does not rise at all (my choice) so this time next year I’ll be on deep-fried Bonios and Gravy for dinner….if I can afford the gravy that is. So whilst I sit and bemoan this inflation thing, it pales into insignificance when compared to the exchange rate movements between the Euro and the Pound. 

When I arrived in France nearly 10 years ago, I got 1.64 euros (or the equivalent in Francs) for each pound I transferred. Luckily I bought my house out here at that rate so in some respects I was lucky. A few years later after my assignment came to an end and BT wanted me back in the UK, I asked for and was granted the right to join BT France and be paid in Euros. They offered to convert my UK salary to Euros at 1.60 and I said……..NO ! What an idiot. I tried to get a raise to cover the extra income tax I would have paid in France but BT called my bluff and won and recalled me back to the UK (I never went)! I now sit here and cry when I think of that monumental error on my part but then again if I’d have taken the French contract I’d probably still be trying to convince potential clients to buy something from BT instead of spending quiet days looking up inflation rates on French government websites with a glass of chilled white wine on my desk ! 

The exchange rate is now about 1.25 Euros to the Pound and that movement has happened within the last 12 months, so in effect I’ve taken an 11% salary cut since last year when the rate was 1.40. 

Now I know what you’re all saying – he chose his bed so let him lie in it but I’m now a pensioner and everybody loves pensioners. They worry about them – are they being fed enough? Are they warm enough? I now spend my time working out when I’ll get my ‘winter heating allowance’ (yes – you get the money out here as well despite the fact that you can sunbathe on Boxing Day) and then I’ll get my State Pension (yes – you get that out here too) and then, hopefully, the Pound will have risen against the Euro and I might actually get a ‘pay’ rise.  The temptation, is of course, to transfer everything you’ve got in the UK into Euros and then forget about it but, ever the optimist, I fully expect the new Conservative government in 2010 to sort things out, the pound will rise and I’ll be a happy pensioner until some bright spark in the government wonders why they are paying the winter heating allowance to Brits on the Cote d’Azure……and stops it.

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