The effect of devaluation

The pound has been falling against the euro throughout the millennium.

This means that it’s becoming less and less attractive for foreigners to work here, and more and more attractive for British people to emigrate to the continent.

To show the effect, I’ve taken a hypothetical worker, earning £21k in the UK eight years ago, and the equivalent, €35k in the Eurozone. I’ve then increased the salary by 3% each year:

Year Exch. rate Worker in the UK Worker in Eurozone Percentage
2000 0.60 £21000 €35000 £21000 €35000 100%
2001 0.62 £21630 €34887 £22351 €36050 97%
2002 0.64 £22279 €34811 £23764 €37132 94%
2003 0.70 £22947 €32782 £26772 €38245 86%
2004 0.70 £23636 €33765 £27575 €39393 86%
2005 0.69 £24345 €35282 £27996 €40575 87%
2006 0.68 £25075 €36875 £28418 €41792 88%
2007 0.71 £25827 €36377 £30562 €43046 85%
2008 0.84 £26602 €31669 £37243 €44337 71%

This is a dramatic change. In other words, seen from the continent, British people are now earning only 71% of what they did eight years ago.

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