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PostMallorca and British Expats (Timothy Ashby, -Spain, 08/19/19 11:10 am)
Rosemary and I have been at our house in Mallorca since July 11th, and have another two weeks before returning to the definitely "un-summery" weather in London.I wanted to share some observations about life in Mallorca.
Despite its reputation as a "holiday" island (which is undeserved, as the resorts are on the coast, and Mallorca has thriving light manufacturing and agricultural sectors in addition to tourism), the cost of living here is significantly less than in the UK (especially in London).
I have made comparison notes on grocery prices, etc., over the past few months, and find that food and alcoholic beverages are one-third to one-half less than in say, a Waitrose in London and a Mercadona, Carrefour or Lidl in Cala Ratjada (our nearest town) or Palma. Of course, it is to be expected that good Spanish wine can be purchased for €3-5 per bottle, but decent Italian, German and French wines are comparable in price (I bought a case of Beaujolais for €4.70 per bottle, and French champagne [not cava], every bit as good as popular brands such as Veuve Cliquot, Pommery or Piper-Heidsieck, is available at supermercados or bodegas for around €12.00. As a single malt connoisseur, what I find a delight is that all brands of imported Scotch whisky cost less here than in the UK. Of course, this will probably change after Halloween due to EU tariffs despite the devalued pound, so I am stocking up.
Segueing to Brexit. Yesterday the Sunday Times featured an extensive exposé of a leaked Whitehall (i.e. official UK government) dossier known as Operation Yellowhammer, which details the negative impact that the UK can expect in the event of a "No Deal" Brexit. Today, Downing Street is scrambling to cover its exposed backside over the leaked document, claiming that it was drafted for the benefit of Remainer ministers in the previous government, it's nothing more than "Project Fear" redux, etc. However, I have heard from several of my credible government sources that the document was actually drafted after Boris became Prime Minister to comply with his orders for No Deal Brexit contingency planning. Dame Carolyn Fairbairn, director-general of the CBI (Confederation of British Business), said on BBC Radio yesterday that avoiding crashing out without a deal must be the "number one priority" for the government and that "Yellowhammer does show is just how incredibly serious for our economy a no-deal outcome would be."
We´re seeing the impact of the looming Brexit here. Our Palma-based immigration lawyer told me that there is a four months backlog of residency applications from British people just for the Balearics (Mallorca, Menorca and Ibiza), whereas normally processing takes three weeks. A recent survey by the international money transfer service CurrencyFair showed that more than a third of British expats (34 percent) are already actively seeking a formal farewell to their home country due to Brexit, and 23 percent will seek citizenship for themselves and/or their family in case of a hard Brexit (around 325,000 British citizens live in Spain). Over half of the British citizens living outside of the UK surveyed are worried about their citizenship rights as an expat (53 percent), and half (50 percent) are concerned about their citizenship rights in commonwealth countries due to Brexit.
Anticipating this, I ensured that Rosemary got her Residency Permit in January (mine is pending, but as I US citizen I am not subject to the uncertainty and possible residency backlash as the British nationals are).
We have several friends who have recently moved full-time from the UK to Spain (Mallorca, Alicante and Valencia). We also know of a number of people who are selling UK assets and seeking safe havens elsewhere. In the UK early stage tech sector, which I am very familiar with, investment has nearly disappeared. Investors pulled £1.03 billion from UK equity funds in the first six months of this year and allocated £457 million to North American funds, according to the Investment Association. London real estate prices have fallen significantly (fortunately my 25-year-old daughter benefited from this recently, buying a lovely flat that she could not have afforded two years ago). In contrast, house prices in Mallorca are increasing by an average of 4 percent per year, and we estimate that the value of our house has gone up 15-20 percent, partially due to applying for and getting an ETV (tourist rental license), which are like gold and very difficult to obtain as the government has imposed an ETV moratorium on many municipalities because local people were being forced out of rental accommodations due to Airbnb type rentals.
JE comments: An excellent "twofer" from Tim Ashby, on Mallorcan expat life, Brexit, and the connection between the two. At this point we've seen everything from the "sky is falling" scenarios to Brexiteers arguing that the economy will actually get better. Who will be right? We'll find out soon enough.
Meanwhile, Tim has found the perfect way to hedge your bets: stock up on single malt.