Page last updated at 06:07 GMT, Monday, 23 June 2008 07:07 UK

Has the gain in Spain gone down the drain?

By Simon Atkinson
Business Reporter, BBC News, Costa Blanca, Spain

A sign
Competition for the expat euro, and palate, is intense

With a copy of the Daily Mail on the cafe table, Eric Summers orders a white coffee for himself and a tonic water for wife Viola - in fluent Spanish.

A late-morning drink on the pavement cafes of Torrevieja has been a way of life since the couple moved to the Costa Blanca about nine years ago.

But in recent months, like many others, they have been more careful about watching the pennies, or at least the euro cents.

Eric and Viola are among the estimated 375,000 expatriates who have retired to Europe and seen the value of their UK pension plummet because of the soaring value of the euro.

Many state pensions, paid in sterling, are now worth between 50 and 80 less a month after the exchange rate sank earlier this year.

"You definitely notice it," says Eric, 78, folding his newspaper.

"This time last year my British pension got me 750 euros a month - now it's about 670 euros."

Better off

They are not pleading poverty but their sinking incomes have been compounded by problems in Spain that are all too familiar to their family back home - inflation and a struggling property market

Like in the UK - Spaniards and expats who have made their homes here have seen the cost of filling a supermarket trolley rise sharply while on the petrol station forecourt, the price of fuel is soaring.

Eric and Viola Summers
Eric and Viola Summers can afford a better life than they could in the UK

Eric and Viola say their weekly shopping bill has leapt from between 30 and 40 euros, to at least 60 euros.

"All the prices have gone up, but even though things have got more expensive, we're still much better off than we would be in England," Eric adds.

"If we were living there we'd have to be on benefits."

And with day after day of sunshine, it is easy to see how moving abroad - and staying there - is not a decision purely driven by economics.

"The quality of life here is so much better," says Eric. "Of course there's the weather, but the hospitals are tremendous and it's a very cultural place too - lots of concerts and shows. We love it."

Language barrier

On Torrevieja's newly repaved promenade, the chalk board outside St Jeremi's Traditional Irish Abbey pub advertises Guinness and an All Day English Breakfast.

A graph showing how many Euros 1 will buy

Brenda Chuter has opted for an orange juice, but after just 18 months living in the nearby village of Cabo Roig, she misses home and is contemplating moving back to Chesterfield in Derbyshire.

And the reason is partly the rising cost of living.

"We have really cut back on all the fripperies, like lots of our friends have," she says.

"We use to eat out three to four times a week but now it's more like once a fortnight. We still tend to go out for a Sunday lunch though because that is quite cheap."

Her husband works away for much of the time, and she earns some money selling her homemade English cakes and pastries to expats at car boot sales. (Walnut and coffee cake is particularly popular, she confides.)

Brenda moved to Spain after being made redundant, thinking it would be "a good idea".

"In some respects I'm regretting it. Making money is hard. I know I could go back to home and get a job as a secretary like I used to or some sort of office job.

"To get office work here you need fluent Spanish. I have lessons and a teacher for one-to-one lessons but it's difficult to keep it all in my brain!"

However, pointing to the blue skies, she says there is one factor that keeps her here.

Allan and Audrey Sinclair
I don't like Spanish food and never will

"The one nice thing about Spain is that when you wake up and pull up the blinds it's all blue skies and sunshine. It's very rare that you wake up to dull skies and the weather is vile."

The weather and the prospect of the type of home unaffordable in the UK has been the magnet for many of the thousands who still move to Spain each year.

But the Spanish housing market has seen ructions far worse than so far experienced in the UK with some property prices falling by more than 20% in the last year, even though the average is closer to 4%.

Lending squeeze

For those looking to offload their homes in this region, the strong euro means that owners are having to cut asking prices by at least 15% to attract British buyers, says Mick Roscoe, of The Property Shop in Quesada, about five miles from Torrevieja.

"Lots of estate agents have gone out of business. Sales volumes are about the same as last year, but it tends to be cheaper properties that sell and we're having to work harder to get customers.

"It's a good time to buy if you have got the money but the banks are really tightening up on loans."

A Spanish supermarket
Like in the UK, the cost of grocery shopping in Spain is on the up.

On a typical Costa Blanca housing development - or urbanization - every street has houses up for sale - from one bedroom apartments to large villas with their own swimming pools.

Some have been on the market for more than a year, despite desperate owners slashing the asking price.

Rosalind Albon's apartment in the village of Rojales has been up for sale for 12 months.

"It went on the market for 270,000 euros but now, even after I cut the asking price to 200,000 euros, there is little interest," the 62-year-old former restaurant owner says.

"I'll be quite happy to sell it and might even come down a little bit more if I have to, but the main people who buy over here are Brits and at the moment nobody has the money."

UK expats face Spanish troubles
14 May 08 |  Business
Property slump in Spain
14 May 08 |  Special Reports
Spain: 'No fresh food'
10 Jun 08 |  Europe

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