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Thoughts on the British Pound

By Gareth Horsfall - Topics: Currencies, Euro, sterling
This article is published on: 18th October 2017


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.

Currencies Direct

You may be aware that at The Spectrum IFA Group we refer our clients to Currencies Direct in the UK for foreign exchange transactions.

I had a recent conversation with them about the number of new entrants into their market space and the availability of competitor firms and how it was affecting their business model. However, they informed me that they have some of the most competitive foreign exchange rates on the market, because of their size, and they are happy to discuss beating rates offered by existing long terms providers and also the newer online only entrants into this market place.

If you are making transfers through an existing service or want/need to start then let me know on and I can introduce you to their representatives to discuss their competitive rates.

As my grandma used to say to me:


For Brexiteers and Remainers alike

By Gareth Horsfall - Topics: BREXIT, Euro, europe-news, Italy, Uncategorised, United Kingdom
This article is published on: 17th October 2016


It was only a matter of time before I got onto the subject of Brexit once again. I have been trying to avoid it like the plague and certainly will refrain from offering any views in this article.

However, I do want to inform you about some very important developments for UK citizens who are living in Italy.

Since Brexit, it has become apparent that whatever stance you took at the vote, that UK citizens living in Italy may very well lose the right to universal access to healthcare, pensions, the right to acquire citizenship and running a business. Equally we may lose the right to freely move across other European states and we will almost certainly, the ways things are presently moving, lose the right of permanent residence in Italy without a permesso di soggiorno.

I am certainly worried about all the UK negotiations with the EU and whether you voted for Brexit or not and/or if you are a resident in Italy or intend to be, then they will surely affect you. One way of getting round this is to try and attain cittadinanza, (you can find out how , HERE. The page is in Italian!) if you are eligible. The other way is for us to try and get our rights as UK citizens, who are already living in and resident in Italy, recognised by either the UK and/or Italy.

In France, Spain, Belgium and Germany there are big movements afoot by politically inclined and connected individuals who are writing to their respective EU states and negotiating with them on behalf of all UK citizens already living in these countries and the rest of the EU.

Here is a little of what they say:

Brexit should not have a retrospective effect on individuals. UK citizens currently resident in the EU and EU citizens currently resident in the UK should be expressly treated as continuing to have the same rights as they had before Brexit. This is not confined to a right of continued residence but extends to all related rights such as the acquisition of citizenship, the right to continue to work or run a business, the right to healthcare, pensions etc.

These citizens from both sides of the Channel all made their decisions on where to live and work in genuine and reasonable reliance on the UK’s membership of the EU. Whatever the rights and wrongs of that membership, it cannot be right for millions of people to have their lives turned upside down when that could easily be avoided by a mutual agreement that the status quo prior to Brexit should continue to apply to this group.

Rumblings in Italy

I am happy to say that, in Italy, there is now a similar group of people who are campaigning to represent UK citizens in Italy. They are a UK/Italian solicitor based in Rome, retired barristers and journalists who are aiming to gather recognition in the UK, and in Italy, at a political level and fight to retain EU rights for UK citizens living in Italy.

The subject of this E-zine is to spread the word of this to as many British people living in Italy, or intending on moving to Italy, as possible.

They have a Facebook group. If you are interested in ongoing developments they will be posted regularly on their page. You can ‘Like’ it from the link below. And don’t forget to send this link to as many other UK citizens living in Italy, as you know.

(If you are unable to join this group, or do not use Facebook, then you can register your presence with the group at their email address: You may also contact them if you have any specific skills or contacts, or want to get involved in some way).

The group is closely affiliated with who are a group of UK citizens living in Berlin and who are fostering co-ordination between the various groups around Europe.

It would appear that this group of people in Italy are the ONLY group which is actively campaigning in Italy and ideally it should stay this way. A lot of the campaigning will have to be directed at the Italian government and we all know what a headache that can be. One focal point will be a useful way of making contact with you, when required, and also informing the group of any hurdles you may be facing already, or start to face, as a result of Brexit.

The group is an open group, subscription free, and welcomes any ideas, comments or information you might be able to offer.

Please spread this onto as many UK citizens in Italy as you may know and ask them to sign up to the Facebook page, if they have the possibility to do so. Otherwise I will, as usual, be updating you with ongoing developments here. I am in regular contact with the group of individuals mentioned above and will aim to send out messages when necessary, alongside my usual ramblings.

This has been more of a public service notification than one of my usual E-zines but I hope you are reassured that there are people out there who have the ability and connections to try and make our life easier in Italy, depending on the outcome of the Brexit negotiations.

The UK’s future membership of the EU

By Daphne Foulkes - Topics: Euro, europe-news, France, Residency, Uncategorised
This article is published on: 13th October 2015


As the media hype heats up over the question of the UK’s future membership of the EU, clients are already asking what will happen if the outcome of the referendum is to leave the EU?

The simple answer is that we do not really know because a country has never left the EU. What we do know is, as British expatriates ourselves, we will be affected in the same way as our clients.

The more complicated answer is that it will depend upon whether it is a ‘soft exit’ or a ‘hard exit’.

A soft exit would be, for example, remaining as an EEA State (in the same way as Norway, Iceland and Lichtenstein). As such, the UK would still have access to the single European market and full freedom of trade within the EU. However, in addition, the UK would be free to negotiate bilateral trade agreements with countries outside of the EU, something that is not possible with full EU membership. The UK would still have to adhere to EU product and financial regulations, as well as social and employment rules. EU budget contributions would still be required, although at a reduced level. Ability to restrict inward EU migration would not be allowed.

A ‘hard exit’ would take the UK outside of the EEA, resulting in it having no automatic access to trade within the EU, but it could continue to negotiate trade agreements with non-EU countries. There would be no more EU budget contributions and also no requirement to adhere to EU Regulations. Inward EU migration could be restricted.

With a ‘hard exit’, as British expatriates living in France, we would need to apply for a Carte de Séjour, but if already resident in France for 10 years, may be granted a Carte de Résidence. Certificates S1 would become a thing of the past and so British expatriates would have to pay cotisations for French health cover. Equally, EU nationals living in the UK, would no longer have an automatic right to live and work there.

The referendum is to take place by the end of 2017, but it is more likely now that it will be in 2016. What we can be certain about is that in the period leading up to the referendum, there will be uncertainty – in capital markets (particularly in the UK) and in currency markets (Sterling is likely to be under pressure).

As if the referendum was not enough to think about, we also have to continue playing the guessing game with central bank policy! It was widely expected that the Fed would start to increase US interest rates in September, but that was not to be. Whilst an increase is not entirely ruled out before the end of this year, no-one can be certain. It is unlikely that the UK will move on interest rates before the US.

In times of such uncertainty, it is more important than ever to seek advice on how to protect your wealth. At the Spectrum IFA Group we have a range of solutions to offer clients, depending upon attitude to investment risk and objectives. For example, have a range of capital protected investments and other low volatility multi-assets funds available. Hence, clients’ portfolios can easily be adjusted to protect their wealth, as and when necessary, something that is particularly appropriate during times of volatile markets.

Even when markets are not volatile, the benefits of diversification gained through investing in global multi-asset portfolios cannot be overstated. If this is combined with using investment management firms that have the size and capability to carry out extensive research into global markets, and investment risk is managed effectively, this considerably increases the chances of the clients’ investments performing better than the average over the medium to long-term.

Some people may be afraid to invest in capital markets during times of uncertainty. However, sitting with large amounts of cash in a bank is not risk-free. Apart from institutional risk, there is the real enemy of inflation, which can erode the real purchasing power of your capital, particularly since interest rates continue at ‘all-time lows’. Holding cash in the bank should really only be for short-term needs which of course includes any short-term capital projects that you might have planned, as well as a cushion for emergencies. Bank deposits are not usually appropriate for medium to long-term investment.

The investment solutions that we recommend to our clients are all carried out within tax-efficient products, which are also highly beneficial for inheritance planning in France. Everyone is different and that is why it is very important that we carry out a full review of a prospective client’s situation to find the right solution for them. It is equally important to ensure that this is kept under review and to not be afraid to make adjustments, when necessary.

The above outline is provided for information purposes only and does not constitute advice or a recommendation from The Spectrum IFA Group to take any particular action on the subject of investment of financial assets or the mitigation of taxes.

The Spectrum IFA Group advisers do not charge any fees directly to clients for their time or for advice given, as can be seen from our Client Charter at

Grexit, Greferendums and the European effect

By Daniel Shillito - Topics: Euro, Greece, Grexit, Italy, Uncategorised
This article is published on: 6th July 2015


Recent events in Greece and the effects of now being in arrears with regard to their IMF debt repayment, cannot escape our screens. Now as Greece stumbles toward a referendum this Sunday, many are wondering what could happen next, and what will it all mean?

This article is to provide my observations and add to a recently written article by a colleague of mine at Spectrum, about Greece and potential implications of the current debt crisis.

One key point I would like to repeat from Daphne’s article here, specifically in relation to investing for your future is this:

“If there is a Greek exit, there may be some immediate selling off of (riskier) assets, but longer term, the economic impact to the rest of Europe should be limited”

From a relationship perspective I read a great article reported today in the Guardian that offers good insight into the likely impacts of the strained relationship between the Greek Syriza government and European leaders, as a result of the Greek government’s approach to debt repayment and austerity of recent weeks and months. I recommend it to you, here

As indicated by the author, Europe is prepared to be tough in negotiating with the Greek Prime Minister, knowing perhaps “For the euro elite, the dangers of Grexit are outweighed by the risk that larger states could follow a successful Greek stand against austerity.”

In my view, creditors such as these are always more willing to negotiate (and so debt repayment schedules can be flexible) where they feel they are dealing with a leadership that is less inclined to use political posturing and more willing to implement significant reforms.

No-one quite knows the outcome of the potential Greek referendum on Sunday, and it’s this uncertainty which markets do not like typically, and certainly, neither do European leaders negotiating with Tsipras like it! Fortunately for everyone it’s only 3 days until Sunday.

The political future of Tsipras and his government hangs in the balance. With a little luck, a pro-Euro-vote outcome from the people of Greece looking for stability and a recommencement of emergency funding from the ECB, will ultimately enable Greece to return to the ongoing challenges of reform. Dedication to such reform is perhaps the only real key to the prospect of negotiating in the future for some write-off of unrepayable debts.

This article is my opinion only and provided for information purposes, and does not constitute advice, opinion or any recommendation from The Spectrum IFA Group to take any particular action on the subject of investment of financial assets or the mitigation of taxes.