British expats back sterling and stick with UK banks for financial products, survey shows

by Ray Clancy on September 21, 2010

British expats are confident about the performance of sterling and most prefer to stick with a UK bank for financial products when the move abroad, research shows.

Some two thirds, 62%, still use a UK bank for pensions, insurance needs and financial products, the Lloyds TSB International Expat Survey shows.

Only 5% of respondents relied on their bank for expat health insurance cover and despite almost nine in ten expats living abroad for more than five years, over half, 55%, still had an account with a British bank. In addition, 80% said they still hold money in sterling.

Findings from the study also confirmed that sterling is viewed in a positive light, with 44% of expatriates expressing confidence in the currency, compared with 11% who were most confident about the euro. Just 3% said weakness in sterling might make them return to live in the UK

‘It is reassuring to see that so many British expats are confident in the future of sterling which, after depreciating over the past few years, has stabilised as the economic recovery has taken hold,’ said managing director Jakob Pfaudler.

The survey also found that 83% of those interviewed turned to British companies for all their financial needs such as insurance and investments.

‘It’s good to see confidence in the British banking system is returning. Britain’s economy is showing continued signs of progress, with consumer confidence returning and businesses beginning to invest again. At the same time, the British banking system has returned to profitability, which will enable it to support and underpin the economic recovery,’ added Pfaudler.

However, British expats are reluctant to move their money between bank accounts, despite the fact that they could be losing out on thousands of pounds by not moving their money to an account with a good rate of interest,’ the survey also found.

According to Rachel Thrussell from Moneyfacts, it might be worth checking rates on offshore accounts. ‘The majority of rates have gone down simply because they are linked to the Bank of England base rate, so when it goes up, we will start to see these rates go up as well, because most of the offshore accounts are offered by subsidiaries of the UK banks,’ she explained.

The culture of savings accounts is more developed, and thus more competitive, in the UK than Europe, so it makes sense for expat Britons to turn to the offshore subsidiaries of banks particularly when they need to get the best rates of interest on their savings.

And with Bank of England base rate left unchanged, as expected, at 0.5% for the eighteenth month in a row, it’s understandable that they will be turning to fixed rates to get the top deals.

Fixing for one year is becoming increasingly popular. The latest poll of top economists by Reuters found that most do not expect rates to rise until next summer and by the end of next year base rate will be 1.5%.

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