So Germany’s highest court has shunned public opinion and backed the creation of a €500bn Euro bailout fund, and perhaps some stability is finally in sight for the Euro? The beginning of the end for financial news as dramatic and nerve-racking as dispatches from some battered war zone? Time will tell, and we’ll be watching closely. But one question we’ve rarely seen answered is how the fate of the Euro has hit local and expat pockets in Britain, and any Brits living abroad – we looked at 5 ways:
- Is your money safe?**
A million years ago, before the financial crisis hit, the idea of a bank going bust was an almost hilarious notion, but it was no laughing matter when Northern Rock and Bradford and Bingley went belly up here in the UK. It's vital then that you ensure your hard earned savings are held in a UK-regulated banking institution that's covered by the Financial Services Compensation Scheme, as this'll mean up to £85,000 of your cash is protected. This figure is PER INSTITUTION mind, so if you have, say, £200,000 worth of savings, spread it around. And double check your savings are definitely held by separate institutions – if they're owned by the same parent company, they may share one lot of £85,000 protection, which is no good if you've more than that saved with them.
2. Home truths
The crisis in the Eurozone has had an almighty knock on effect on the UK property market. The double whammy of a wobbly economy and people being wary about their spending has led to much lower demand for houses, and static, even plummeting prices. If you're a home owner, this is bad news, but should you be laughing if you're a potential buyer? Well, yes and no. The fact is, the havoc in Europe is still making banks and building societies antsy about approving mortgages. So, while house prices may not be on the up, and mortgages themselves have become cheaper in 2012, first time buyers still have to scrape together frighteningly vast deposits, and the acceptance bar has been been risen higher than ever.
3. The pension pinch
One of the scariest things about the European turmoil has been its effect on pensions. Back in 2008, a 65-year-old man with a £100,000 pension fund would have been able to buy an annuity to give him an annual income of around £7,700. In 2012, this became a mere £5,700. If you won't be retiring for a few decades yet, don't worry too much as the economic climate will be very different by the time you go shopping for an annuity. But anyone looking to retire now may have to resign themselves to a much poorer annuity than they'd hoped for. There is the alternative option of an income drawdown, but this can be risky – it's important to speak to a financial advisor who fully understands your situation before making any decisions.
4. Pound stretcher
The European banking crisis has certainly punished the Euro over the course of the year. This has been good news for Brits, with our holiday budgets going further in the Eurozone, and money transfers from GBP to EUR paying out more than they have for a long while. Not such happy times for anybody needing to transfer Euro to Sterling.
5. Anything else of Interest?
The woes of the economic climate have led to the Bank of England setting a rock-bottom interest rate of 0.5% - a staggering figure when you consider it was 5% in 2008. This has been bad for savers, who've been getting far lower, or even no returns on the cash they've carefully stashed away over the years. In fact, savers have lost out on around £60 billion in interest alone. But as usual there's an upside – if you have a tracker mortgage, lower interest rates will leave you with a lot more spending money every month. By Taavet Hinrikus TransferWise Co-founder