When Britain voted to leave the European Union in June 2016, the pound tumbled to historic lows against the US dollar and has hovered around the $1.40 level ever since. This makes it more expensive for Brits to live because of rising import costs affecting goods and services. But for expats—defined as those on corporate assignment—and business travelers, London has become a cheaper place to live, according to the Economist Intelligence Unit’s Worldwide Cost of Living index, released in London today (March 15).
Twice a year, the EIU surveys 400 individual prices across over 150 products and services in 133 cities in 93 countries in order to rank locations by the cost of living. The idea is that businesses will use the ranking to help determine cost-of-living allowances and build compensation packages for staff they send overseas.
UK cities plunged down its most recent index, with London hitting its lowest ranking spot in more than two decades at 30th. (Singapore is in the number one spot). It also identified that Britain’s capital is now 30% cheaper than Paris (2nd place) and 9% cheaper than Dublin (19th place). For example, those living in the UK spend $8.75 on average for a bottle of wine while the average price in Paris is $11.90.
The hit on sterling is great for expats as their wages stretch a lot further. However, locals should expect to see the price of their shopping baskets rise further.
“Intense competition among British retailers accompanied by low oil and commodity prices has kept significant rises in check over the last few years,” said Roxana Slavcheva, editor of the Worldwide Cost of Living report. “But now rising import prices mean that British shoppers will notice higher levels of inflation, even as businesses potentially benefit from inbound retail tourism and cross border trade.”