Brexit fears make London cheaper for expat workers
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London is becoming cheaper for expatriate workers to live in as “Brexit fears” fuel a slump in the pound, according to a global report.
It has slipped from 12th to 17th in the annual study by Mercer of the most expensive cities around the world.
Falls in the pound have meant the costs of living in major UK cities have become cheaper over the past year for expatriates in comparison with some other cities from around the world.
The Cost of Living Survey is designed to help multinational companies and governments determine compensation allowances for expatriate employees.
It weighs up the cost of living in 209 cities across the world, comparing the cost of more than 200 items in each location, including housing, transport, food, clothing and entertainment.
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New York is used as the base city for comparisons with other global cities and currency movements are measured against the US dollar.
Hong Kong topped the 2016 list of the most expensive cities for expatriates, pushing Luanda, Angola, to second position. Zurich and Singapore remained in third and fourth positions respectively, while Tokyo was in fifth place, up six places from last year.
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The report said that while the pound has fallen, “steep rental prices” have helped to prevent the tumble of UK cities down the rankings from being bigger.
“Although the value of the euro has remained steady against the US dollar, the pound has fallen, largely due to Brexit fears,” said Ellyn Karetnick, head of international mobility at Mercer.
“But whilst currency fluctuations will always cause a major impact on costs, local conditions like high property prices can counterbalance the impact of currency movements, as demonstrated with UK and Western European cities.”
Kate Fitzpatrick, a senior international mobility consultant at Mercer, said: “In the past year we have observed strong rental accommodation prices increase in Aberdeen and, to a lesser extent, in Belfast.
“Although there has been only a slight increase in the average rental price in London, this cost remains at the higher end of the scale when compared to cities worldwide.”
The report found that a two-bedroom apartment of “international standards” and in an “appropriate neighbourhood” typically costs £3,200 a month to rent in London. The same apartment would be significantly cheaper in Sydney for example, at £1,840, although someone working in Hong Kong can expect to pay around £4,754 per month.
Someone working in London can also expect to pay around £75 for a pair of jeans and £3.10 for a cup of coffee, while a New York-based employee would pay around £40.50 and £1.59 respectively for the same items, the report found.