Currency rises push up expat costs in Europe

European cities now comprise 40 of the one hundred most expensive places in the world for expatriates, according to the annual 'Cost of Living' report from global mobility specialists, ECA International.

David Sapsted

15 December 2020

But in the analysis of the cost of consumer goods and services in more than 480 locations worldwide, Hong Kong emerges as the most expensive, followed by Tokyo, New York, Geneva, Zurich and London.ECA, which has been researching global costs for almost a half-century to help businesses ensure the spending power of employees on international assignments is maintained, found that European destinations figured so prominently partly because of the strength of the euro, pound and Swiss franc.In addition to the three European cities in the top ten, locations including Copenhagen, Bern, Paris, Dublin, Helsinki, and Munich all ranked in the top 50.However, it was Hong Kong that stood atop the table this year. Steven Kilfedder, production manager at ECA International, explained: “Hong Kong is the most expensive place in the world for overseas workers to live, in spite of the economic impact of the Covid-19 pandemic."Hong Kong is expensive across many areas that we consider as part of our research, but it is the especially high housing costs that push it to the number one spot. This is despite seeing some lower prices in the last year in response to a drop in demand due to the pandemic and ongoing political uncertainty.”High costs for accommodation also represented the main reason why London rose in the rankings to sixth place, with expat rentals almost a third higher than in Geneva and twice as high as in Paris."The British pound has rebounded from the lows reached last year when uncertainty over Brexit culminating in a general election pushed the value of the pound down," said Mr Kilfedder."Since then the pound has gained strength, including rising eight per cent against the US dollar, which means visitors and international assignees visiting and living in the UK may find goods and services more expensive."With Brexit negotiations reaching another crunch point this could have a significant impact on the UK’s ranking in the future through exchange rate changes and possible inflation due to increased trading costs."Meanwhile, ECA found that, in the US, costs had been affected by high unemployment, falling oil prices and low consumer sentiment due to the Covid-19 pandemic.Despite this, New York still ranked as the third most expensive expat city in the world, with San Francisco coming in ninth. But ECA added: "The weakened dollar comes after a surge in Covid-19 cases."The impact of the falling dollar has been exacerbated by a 10 per cent fall in petrol prices, which made many locations in the US more affordable for some expatriates pushing US cities down by an average of six place in the ranking leaving Chicago 30th, Washington DC 38th and Houston 68th."The sharp drop in the price of oil, combined with the economic effects of coronavirus, dragged down prices across the world. “An oil price war with Saudi Arabia combined with the impact of Covid-19 has also resulted in Russia’s Moscow ranking falling 21 places to 56th. The two countries wrestled for a greater share of the oil market by increasing production despite falling demand for oil," said Mr Kilfedder.In Africa, the tumbling oil price had a marked effect in Angola, Africa’s second biggest producer. With the situation in the country exacerbated by mounting debts, political turbulence and the pandemic, the capital Luanda recorded the largest fall in the rankings, dropping 104 places to 141st.However, the picture across Africa was mixed, despite the effects of the global downturn. Brazzaville, the continent’s most expensive city in 19th place, and Pointe Noire (33rd) both jumped up the table mainly because the Congolese currency, the Central African CFA, is pegged to the euro.Other countries using the currency, such as Libreville in Gabon (32nd) and Yaoundé in Cameroon (52nd), also rose in the rankings.Meanwhile, the pandemic's disastrous effects on tourism has been reflected in falling costs in nations such as Turkey, Thailand and Iceland.Global top 20 most expensive locations for expatriates:
1. Hong Kong
2. Tokyo
3. New York
4. Geneva
5. Zurich
6. London
7. Tel Aviv
8. Seoul
9. San Francisco
10. Yokohama
11. Shanghai
12. Copenhagen
13. Bern
14. Singapore
15. Guangzhou
16. Jerusalem
17. Shenzhen
18. Beijing
19. Brazzaville
20. Port Moresby