London sees unlikely fall in cost of expat living ahead of Brexit
Expats sent on international assignments often find themselves in new worlds, with a host of new cultural and economic realities. According to a new report looking to support these business needs, Hong Kong reigns as the most expensive city in the world for expats, followed by Tokyo and Zurich – but surprisingly London has seen costs fall over the last 20 years.
Corporates across the globe are increasingly facing costs related to talent needs as expansion into various key regions, coupled with increased talent scarcity, calls for shuffling staff across global cities. Understanding the cost of living in a broad sense, and in relation to the US dollar, allows organisations to better plan assignments and prepare their staff for the new situation.
To help them do just that, each year Mercer releases the results of its global Cost of Living Survey, aimed at providing companies with an indication of the cost of living in various global regions. The report is based on more than 200 goods and services analysed across 400 data points, covering everything from the cost of basic goods to rent and insurances.
Along with the usual warning such reports have adopted as a staple in recent times, with geopolitical and economic uncertainties ramping up prices alongside instability in housing markets and the fluctuating prices for goods and services across various locations, something unthinkable appears to have occurred. A price tag relating to life in London appears to have actually fallen. While uncertainties are only growing as the Brexit process remains stranded as the exit deadline approaches, expats living in the UK capital have seen an 18% fall in the cost of living in the past 20 years, according to Mercer.
It is difficult to say exactly why the notoriously pricey metropolis has witnessed such a decline over such a long period, although it is likely to be tied up to the turbulent value of the British Pound. While London still ranked in the top 30 of the most expensive places for expats to live as recently as last year, Brexit triggered a succession of plummets in what the pound was worth compared to the dollar and the euro, at present the money of those arriving on the island nation may go further. Those already packing their bags to arrive at the suddenly affordable locale might be well advised to delay such fancies, however, as in another metric earlier this year, Mercer also revealed that London has one of the worst standards of quality of life in Western Europe.
The study, now in its 24th year, also looked across the world at changes to the ranking over the last 20 years. Despite remaining the most expensive city for expats, Hong Kong has actually seen its relative cost fall by 25% since gaining independence from the UK, while Beijing has fallen by 34%. Egypt’s capital of Cairo has seen two decades of change create the biggest fall on the index, however, at a decline of 45%.
Kinshasa in the Democratic Republic of Congo has seen the most significant increase in that time, up 56%, while Bangkok rose by 34%. Seoul saw a 15% increase, while Sydney saw an increase of 14% over the period. Dublin, meanwhile, climbed by 15%, having been hit hard by EU-backed austerity measures over the last decade in particular.
In terms of the world’s most expensive city for expats in the here and now, as was previously mentioned in Hong Kong tops the index. The city state, which remains autonomous, has high costs across a variety of categories, from accommodation to a cup of coffee ($8). Tokyo and Zurich take out the number two and three spots respectively, while Singapore moves up one spot to number four and Seoul rounds off the top five – 4 of which are in Asia.
Luanda, Angelia, which was in the number one spot last year fell to number six – the city costs are skewed by high local tariffs on goods for expats. Shanghai is number seven, while Beijing takes the number 9 spot. Bern completes the top ten, highlighting Switzerland’s reputation as one of the most expensive regions in the world. On the other end of the scale, Tashkent of Uzbekistan, Tunie of Tunisia and Bishkek in Krgyzstan are the world’s most affordable global population centres, at 209, 208 and 207 respectively. Middle Asia, particularly the old USSR countries are noted as the most affordable, alongside a number of centres across Africa.
Regional costs
By region Asia has the most expensive destinations, all five in the top ten, followed by Europe with five entries in the top 20. North America is dominated by US cities, with New York City at number 13, while the rest are in the late 20s to early 50s. Africa, meanwhile, has a host of cities in the top 20, while South America finds itself between 50th and 100th for its top five entries.
In the Pacific, Sydney comes in at 29, while the rest of Australia is more affordable. New Zealand meanwhile has one entry in the top five for the region, Auckland, at 81. Eastern Europe meanwhile has Moscow take the number 17 spot, while St. Petersburg comes in at 49, while Riga takes the number 92 spot.
Ilya Bonic, President of Mercer’s Career business said about the survey, “While a mobile workforce allows organisations to achieve greater efficiency, utilise top talent, and be cost effective with international projects, volatile markets and slowing economic growth in many parts of the world require them to carefully assess expatriate remuneration packages.”
