End of the Eldorado dream: A plunging pound and property crash have left thousands of expat Britons on the breadline
By Tom RawstorneLast updated at 11:45 PM on 19th December 2008
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As a successful entrepreneur, it was nothing but Prada and Versace for Angela Nolan, a woman who had so many designer shoes her friends joked that she'd give Imelda Marcos a run for her money.
So quite what they would make of her current predicament the 64-year-old can hardly imagine.
It is not what she's wearing (a smart black wool jumper and trousers set off by a pink pashmina) but where she bought it.
'It's from the charity shop,' she says.
There are very few, if any buyers for properties in the Costa del Sol, leaving many expats unable to move back to the UK
And that's just the start of it. 'I used to have pedicures and manicures every three weeks, but I've not had anything like that for months.'
Angela, who retired to Spain seven years ago, is trying to make light of the situation.
But the truth is that she is so worried about money that she goes to bed early rather than switch on the heating.
She has also scrapped her usual Christmas dinner with friends and is looking for other ways to cut down her outgoings.
'I've never worried about money before,' she says,' but now it's all I think about. Did you know a canister of heating gas has gone up from 9.4 euros to 13.8 euros - that's a 46.8 per cent increase.'
Like tens of thousands of expats, Angela is struggling.
All along the coast, from Alicante on the Costa Blanca to Marbella on the Costa del Sol, a very middle-class dream is crumbling.
The aim was to escape a life in Britain where crime was rampant, the weather miserable and the cost of living high.
Now, in Spain, a legion of pensioners finds itself trapped by rising prices, a property market that has completely collapsed and a pound that has fallen almost 20 per cent against the euro.
With the two currencies approaching an unprecedented one-to-one parity, it means that those surviving on state pensions paid in pounds have seen their monthly payments fall by hundreds of euros.
Private pensions are similarly affected by the falling pound, while those who support themselves from the income on their savings have been hit by swingeing interest-rate cuts.
Calahonda, Costa del Sol: There was once a property boom in this part of Spain, when a three-bedroom flat in this block went for £151,000
The younger generation is faring little better, with unemployment in Spain at ten per cent. And for many expat businesses it's even worse, as their natural clientele - other expats and British tourists - tighten their belts.
What makes matters more worrying still is that for many there is no way out of this nightmare. The housing market has gone into freefall, with negative equity now widespread.
Properties are being marked down by as much as 50 per cent - and still not shifting. New building has virtually stopped.
Couples are being forced apart, as husbands or wives head home in a desperate attempt to find work.
And nowhere is this Costa crisis more apparent than in Estepona, a seaside town at the western end of the Costa del Sol. Sure, the tills are ringing this Christmas.
The only problem is that it is the charity shops - not the bars or restaurants - that are taking all the cash.
'We've never been so busy,' says Janet Allwood, who retired from Shropshire nine years ago and is now treasurer of the local Age Concern charity, which has an outlet in the town.'
And while there are some Spanish customers, the majority buying are expats.
'It used to be the weather we'd gossip about, but now it's "How are you managing? How much has your pension gone down?" This time last year, I wouldn't have had a clue what a euro was worth, but now I know what it is to the nearest percentage point. We check it every day.'
While in January £1 was worth 1.4 euros, in recent days the two currencies have effectively reached parity: £1 buys 1 euro.
For Janet, the relative worth of her British state pension has fallen from 586 euros a month to 402 euros.
To make the situation tougher, her 65-year-old husband Roger, a retired electrical engineer, recently placed his private pension pot into a bank in Gibraltar.
Like many other expats, the couple preferred to keep their savings in sterling, investing in banks and building societies that they were familiar with.
Estepona: Once a playground for wealthy expats, the resort is now suffering because of the financial crisis
Now many are regretting such loyalty. As the pound plunges, so does the worth of their savings, making it disadvantageous to exchange into euros to cover living expenses. On top of that, interest rates just keep on falling.
'We are frightened to spend anything,' says Janet. 'We are even worried to spend on airfares to see our grandchildren, and are staying in Spain for Christmas.'
Of course, Janet knows that many others are far worse off than she is.
She reveals that Age Concern has seen a 'significant' rise in the number of Britons being referred in desperate need of assistance.
'We've been called to help people who have been forced to give up their homes,' she says. 'Some can't even afford the airfare back to Britain.'
Those are the extreme cases. What is so extraordinary about the situation unfolding on the Costas is the suffering of the silent majority. Those most hard-hit are individuals who least expected to find themselves in financial difficulties.
Having worked hard all their lives, they took the decision to move to Spain to improve the quality of their lives in retirement.
They were attracted by the climate, relatively inexpensive properties, a lower cost of living and a healthcare system which was both good and free to use under a reciprocal arrangement with the NHS.
To do this, they sold homes in Britain and bought property in the south of Spain - the differential in prices allowing them to put any money over in the bank.
Add pensions, both private and state, and this generation of expats was confident they had sufficient funds to support themselves through a comfortable retirement for as long as was necessary.
Paradise: Marbella's exclsuive Nikki Beach club, popular with expats
But in the past six months the rug has been pulled from beneath their feet - and Angela Nolan's experience highlights this perfectly.
A single woman, she set up and ran a highly successful media advertising agency in London.
At the age of 57, following the death of her mother, she closed her business and moved to Estepona.
She bought an apartment before upgrading to a bigger property on a golf-course development. Two-and-half years ago, Angela put that property on the market.
After a year, it finally sold for 385,000 euros - 100,000 euros less than she was orginally asking. She placed the money in a bank in Gibraltar, along with other savings.
With no pension, the idea was to use the interest to cover rent and other outgoings.
But the falling pound and interest rates have scuppered those plans. To demonstrate, Angela pulls out a notebook.
It shows that while the rent for the apartment where she is now living has stayed the same over the past 21 months - 850 euros a month - the weak pound means the actual cost to Angela has increased by 43 per cent.
To cover the rent, she used to withdraw £575: now it's £825.
'In the past, I never worked to a budget,' she says. 'Now that has all changed. Not only is the pound weak but food bills have gone up at least 20 per cent.'
No doubt there will be those who have little sympathy with Angela and her like. After all, they were hardly moaning when the sun was shining and the pound was strong.
'None of us came to live in Spain without money,' she points out. 'Unlike Britain, which has an open door policy for anyone who arrives without even a penny to their name, we knew that if you came to Spain you had to have money to survive.
'We brought our own money with us and we invested it wisely. We bought our own homes and we have never taken a penny from the state. But what is happening now is that we are being buried by economic factors beyond our control. It's really worrying.'
Angela is in the fortunate position of not being tied to a property. She intends to move back to England as soon as she can, where she believes her money will go further.
Many more expats find themselves stuck in Spain, their life savings tied up in property they cannot sell.
Drive east or west from Malaga airport and one cannot help but be struck by the half-built 'urbanizaciones' that litter the hillsides.
Costa de la Luz : The sunny dream, with sandy beaches and constant sun, has turned soar for many expats
Work has stopped on these gigantic construction sites because demand has evaporated. This oversupply makes selling a house a real challenge, something that Barrie Waterfall, 66, a former prep school teacher, and his wife Jan have discovered to their cost.
The couple moved to the Costa Blanca in 2000. To fund their move they sold their three-bedroom house in Lewes, East Sussex, for £165,000 and bought a 150-year old town house in Xativa for £150,000.
But when they decided the Spanish lifestyle was not for them and put the property on the market, they were in for a rude shock.
'I never really settled in Spain,' explains Jan, 68. 'I missed my grown-up children and Barrie had sick relatives in the UK who needed looking after, so we made the decision to move home. This time last year we put the house on the market for £228,000 - but there has been no interest in it,' she says.
'Previously, you would have just dropped the price a bit, but because of the collapse of the market we have been told that that would make no difference.
'We need to make enough to pay off our £100,000 mortgage and to buy a small flat back in England, but there aren't even property developers out there willing to take it off our hands. As it stands now, our dream house is worthless.'
If that weren't bad enough, the couple are struggling to make ends meet. Barrie's pension has fallen by 300 euros a month, while their mortgage repayments and everyday costs have all gone up.
'Taking everything into consideration, we have worked out that after all our outgoings in November 2007 we had 310.41 euros left over every month,' says Jan.
'Now, in December 2008, we are minus 154.24 euros every month.'
In an attempt to make ends meet, Jan has had to go back to Britain to find a job. Having previously been employed as an office administrator, she now works as a live-in housekeeper for a businessman in Chelsea.
'I never dreamed I'd have to work at my age,' she says. 'But we need this money simply to pay for food and basic bills. The strain this has put on Barrie and myself has been immense. Just as we expected to be enjoying the most stress-free part of our lives, we are in a state of constant worry.
'I would also say if you are going to be broke, don't be broke in Spain. There is no one to turn to here. We are still foreigners in Spain, and yet now we don't belong in the UK.'
What makes the situation in Spain so worrying is that the problems today could just be the start of it. The bank J P Morgan recently predicted that the pound will sink to a record low of 92p per euro early next year.
While that will further hit those with fixed incomes, it will also wipe out many businesses reliant on British tourists, who will inevitably be deterred by the poor exchange rates. Indeed, bars and restaurants are already feeling the pinch.
For the past three years, Martin Fleet has run a bar in the Costa del Sol resort of Calahonda. But on New Year's Day he will hand back the keys to his landlord and close the business down.
'I came out to Spain for a better life - sunbathing on the beach, sitting on the terrace and al fresco evening meals,' said the 43-year-old former butcher from Oxford. 'While I've not been making a fortune, I've always worked hard and had money in my pocket.
'But the past few months is the worst I've ever seen it. At this time of year we'd normally get the golfers in, as well as the pensioners who come out for the winter, and Brits with second homes.
'But I've made a loss for the past three months, and it's got to the point that I can't afford to pay the rent on the bar any more. On January 1 I'll be handing in the keys.'
Martin would like to stay and find another job, but worries that won't be possible and he'll have no choice but to return to Britain.
'I'm hoping and praying the New Year will mean a new start,' he says. 'I'm trying to stay positive.'
Up and down the coast of Spain, British expats will be doing the same. And crossing their fingers even as they despairingly check the foreign exchange rates once again.