The interest on your savings is minuscule, your pension pot has been hammered, and the value of your house is plunging. You might be made redundant – and, to cap it all, we’ve had the coldest winter in 30 years. In short, life in Britain isn’t looking great. This may be a worldwide wipeout, too, but there could be a few safer, if not entirely safe, havens to run to with what’s left of your wealth.
“Very few places have not been affected by the downturn,” says Oliver Watson, regional managing director of international recruitment consultant Michael Page. “But if you are looking for an overseas opportunity, look for a sound gross domestic product [GDP, a country’s input and output] and an economy linked to natural resources. Brazil won’t see stellar growth over the next year, but it should be steady. It has an immature and developing market and isn’t exposed to the kind of debts that developed Western countries have suffered from.”
So far, Brazil has weathered the downturn better than most, but low demand for its exportable products means that the South American country will not escape unscathed. The most up-to-date GDP figures show continued strong growth, but they only go to the end of September last year, and business confidence in Brazil is at a six-year low. Brazil’s economy is taking a hit, but the downturn here may be less severe.
This economy has always been fairly steady, neither booming nor busting. “New Zealand has not escaped the effects of the credit crisis, but it has been hit less hard than many European and North American nations,” says Mark Bodega of the currency trader HiFX. com. “And the newly elected National Party’s concentration on the economy is expected to keep it on a even keel.” Research from Statistics New Zealand puts the unemployment rate at 4.2 per cent, with only 94,000 unemployed, up just 0.3 percentage points in three months. UK unemployment was 6.3 per cent for the quarter to December 2008, up 0.4 percentage points over the previous quarter.
But the economic position has brought a change in “immigration focus” from filling skill-shortage positions to protection of jobs for New Zealanders. That could mean that immigrants bringing in plenty of ready cash may be more likely to be granted residency.
China & Malaysia
A tough one. Developing markets weren’t able to “decouple” from Western economies before the downturn, and Asia has certainly been affected. But advocates of the area, such as regional fund managers, note that countries on this side of the world tend to have well-capitalised banks that fund lending the old-fashioned way, via deposits. Government debt levels in China are low, at just 17 per cent of GDP, and despite the recent fall in exports, high savings rates mean the country, and others in the region, have healthy cash surpluses.
Malaysia seems to have learnt lessons from the Asian financial crisis in the 1990s. The country reported a 16 per cent surplus in GDP and international reserves of $107bn, four times the nation’s external debt, towards the end of last year.
“Asia faces some of the toughest conditions since the late 1990s regional crisis,” admits Andrew Beal, fund manager at Henderson Pacific Investment Trust. “However, it is likely to emerge from the recession in much better shape than many Western nations. The region’s famously robust savings ratios mean there are none of the problems with personal indebtedness and property market bubbles that have dragged down Western nations.”
Abu Dhabi & Qatar
Having observed Dubai’s unprecedented rise with interest, as well as the effect the global downturn has had on the city, Abu Dhabi seems to be coming into its own. “Confidence among those people living in Dubai has been dented, but sentiment in Abu Dhabi is very different,” says Nick Tolchard of the International Development Division at Invesco Perpetual. “There is a deeper pool of financial resources here, and it has significant oil reserves. A large number of people and companies are moving here. A lot of strategic, long-term investment is going on.” And, he adds, Abu Dhabi’s strength will help bolster Dubai’s return to growth within around 14 months.
Over the border in Qatar, it’s a similar story. This is one of the richest nations in the world, with extensive natural gas. “Qatar doesn’t feel immune from the global downturn any more than the rest of the region, but as the country sits on such strong reserves, its growth should continue almost as planned,” Tolchard notes.
Where not to go
Some of the hardest-hit countries are those many of us decided to escape to in the past. Spain is an infamous example. By April 2008, the credit crisis began to kick in and the Spanish property bubble burst. The days of strong growth are over, and unemployment has soared to about 14 per cent. Property may be cheap now, but getting a job is tough.
What about the nations further away? “Australia’s resources-based economy has struggled since mid-2008,” Bodega says. “The government has halved its economic growth forecast for 2008/09 to 1 per cent, and the central bank cut interest rates to 3.25 per cent, the lowest in 45 years. The decline has been blamed on the global financial crisis and economic slowdown, and the rate at which visas are granted seems to be slowing.”
And what of Dubai? Tolchard says: “The myth that Dubai was somehow decoupled from the global financial crisis vanished in the final weeks of 2008. The region has been hit by firms retrenching back to their domestic markets.” There are new redundancies daily, and residential property values have dropped 50 per cent in a year. The weather may be far better than the UK, but this is not the best option for imminent relocation.
The UK Foreign and Commonwealth Office offers impartial information about the stability and security of countries; see www.fco.gov.uk/en/travel ling-and-living-overseas
Thank you and goodbye: How to make the move
It’s all about planning. Try to begin tying up your financial affairs as early as possible. This will ensure that you incur as few penalties as possible on any longer-term savings or investment plans you want to liquidate for ready cash. The pound is at a stomach-churning low against critical currencies, so if you think the rate will improve before you go then put larger lumps of cash in an easy-access savings account in the meantime. If you think you’ll be regularly transferring smaller amounts in different currencies, a specialist account such as a local euro-denominated current account or a British-based euro account will help reduce transfer and exchange costs, particularly if you expect to have money or income in two currencies. (Now is also the time to think about how permanent this move is – if you wish to leave funds in the UK then you may need to hand over the power to manage your UK-based money to a family member or close friend.)
Also take time to research the financial advantages you can take with you. If you are working for a UK-registered company within the European Economic Area, for example, you are entitled to both maternity and sick pay as long as your employer is paying National Insurance on your behalf. Over a million pensioners receive their pensions overseas, but if you have already retired when you emigrate it will have to be paid into a UK bank account. And you could even continue to claim benefits such as winter fuel allowances.
Also consider the cost of visas. You may have to pay for private healthcare and schooling once you arrive, and don’t forget the cost of the flights and shipping.