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How do expats benefit from the UK remaining in the EU?

Written on 7 June 2016

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It’s easy to talk about the risks of the UK leaving the EU. There are many, and that is primarily due to the uncertainty and lack of government plan, making the actual outcome impossible. There are potential benefits of leaving the EU – such as improved trade agreements, fairer control over UK migration and immigration, each of which brings one or more counter arguments about whether they would, ultimately, be beneficial overall.

However, the UK is currently in the EU, so let’s look at this from a different angle. Remaining ensures a certain level of stability, which in turn ensures confidence.

Rather than going all “Monty Python” and looking at what the EU has done for British expats, let’s look at the status quo and how the EU impacts British expats lives on a day to day basis.

Migration

Currently there is free movement of EU citizens to elsewhere in the EU. This is a major benefit to expats who have the right to live and work anywhere within the EU and European Economic Area (EEA).

This means an expat may be able to stay indefinitely.

For example, if the cost of living rose in Spain, it would be perfectly acceptable for someone to decide to move somewhere in the EU with a similar quality of life, or lower cost of living, without having to apply for a visa for indefinite leave.

Along with free trade, this right the cornerstone of EU membership and one which countries outside of the EU but in the EEA also have to agree to.

Tax

Currently, countries can set their own tax rules for individuals living in their country. Tax treaties created between two countries are not impacted by the EU and therefore countries are currently free to negotiate their own agreements.

The EU is currently looking at ways in which tax evasion can be tackled to reduce the amount of money lost by highly unethical tax planning, such as moving money offshore into tax havens.

Whether the UK remains or leaves, British expats would be subject to the tax rules in their country of residence and also the UK, according to any tax treaty which exists.

Currency

Remaining in the EU brings with it a certain level of certainty about the British economy.

Therefore, any strengthening or devaluation of GBP would continue to rest on economic events (fuel price, interest rates, fears of recession, expectation of growth).

Average exchange rates since 2002

GBP to

Average since 2002

2015 Average

Current

EUR (Euro)

1.32

1.38

1.28

JPY (Japan)

1.75

1.85

1.56

USD (Dollar)

1.66

1.52

1.45

The strongest annual average for GBP since 2002 was in 2007, before the banking crisis, when you were able to get 2.35 JPY and 2.0 USD to the pound. You could also get 1.46 Euros at the same time.

The weakest GBP has been since 2002 against the Euro was in 2009 when it averaged 1.12 (although it reached parity during the year). The 2016 average for GBP against the USD has not been lower since 2002.

For expats, the referendum in itself looks to have weakened the pound significantly in 2016, although there are other factors to be considered including a weakening British economy – which can also be put down to uncertainty over the UK economy through decreased foreign investment.

Remaining in the EU goes a long way to ensuring (as far as is possible) stability for imports and exports (i.e. free trade), and therefore the economy as a whole – which means that GBP would be likely to remain stable, barring any major global events which are unpredictable by their very nature.

If you draw your income from the UK (pension, rent, UK salary), this means that you can remain more confident about affording the cost of life. Using history as a guide, GBP has such a strong track record against other currencies and would be likely to grow if the UK were to remain.

That’s not to say it wouldn’t grow if the UK left the EU, but without a precedent to follow, it could not confidently be argued that GBP would regain its strength.

Healthcare

While the European Health Insurance Card is not a direct agreement with the EU and is actually an agreement with the EEA, the two are linked by association.

The EHIC ensures that if a foreign national needs treatment from the local health service, the cost of that treatment should be paid for by the home country, rather than the country of residence. I.e. if an expat needs treatment in Spain, you can use your card to get that treatment and the Spanish government would seek payment from the UK government.

If the UK remains as part of the EU, there is no doubt that the reciprocal agreement to provide healthcare which is free at the point of service would continue for British expats wherever they live in the EEA or Switzerland.

Voting rights, human rights and environmental impact

The EU has no impact on the voting rights decided by the UK, therefore voting to leave or remain will not change the 15-year rule. Only the incumbent government can do this, although the current government did pledge to remove this rule when in power.

Any other human rights or environmental decisions will be implemented by the country of residence, but in accordance with EU rules.

The only way the UK would have an impact on these factors in an expats country of residence is during negotiations at committee levels by MEPs and also through the power of being able to veto new rules.

If you are not subject to the 15-year voting rule, you should be able to register to vote for a UK MEP, even if you are not entitled to vote in your country of residence.

Remain means stability, for now

While not a realistic economical case for remain, the fact that “nothing changes” is a major benefit for expats. It means that there would be no uncertainty over the immediate future, nor any fallout from trade negotiations following a vote to leave.

It is possible that other countries may push for an EU Referendum of their own to decide or leave, but any future rules or consequences of these are totally arbitrary at this time.

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