Expat Brits dependent on UK pension and with Inflation in Spain which is running at a 10 year high are hit by the worstening exchange rate

Brits dependent on UK pension or savings are the worst hit - although anyone in business who has income in sterling has taken an involuntary pay cut. This week currency markets valued £1 at 1.246 euros. Last summer, banks were offering an average exchange rate of 1.42 euros to the pound. However, number crunching for those on a tight budget makes stark reading as disposable income is squeezed. The current UK basic state pension is £90.70 per week. At last summer's average, it converted across to give a payment of 128.79 euros. But at the close of currency markets on Wednesday, the same basic pension was only worth 112.99 euros - a shortfall of 15.80 euros a week. This gloomy outlook is worsened for any expat servicing a Spanish loan or mortgage with their UK income, as well as having to meet rising community fees and local taxes. It means a radical rethink of the household budget at a time when the news is full of stories of falling property prices and the so-called 'credit crunch'. Unfortunately, businesses here in Spain reliant on a buoyant UK tourist market are also starting to suffer. A weak pound has a knock-on affect on holidaymakers heading for the sun and their favourite costa. With Britain on the edge of recession, visitors are facing their own financial difficulties at home and seeing savings buy less holiday spending money. A family of four arriving with £600 last summer were rewarded with 852 euros to enjoy investing in a little bit of Mediterranean life. However, again at the close of play rate on April 9th, the same £600 is only worth 747.60 euros - the family losing more than 100 euros that could have gone on a night out, shopping, or a visit to one of the popular tourist attractions. While tightening belts, it must be remembered that currency markets are notoriously fickle but some speculators say sterling - or GPD on exchange rate lists - will weaken several more points before making a recovery. Spanish expats relying on a UK income continue to feel the pinch from sterling's performance against the euro. The value of the great British pound has tumbled against the European currency, denting the spending power of anyone reliant on the exchange rate. And it is a double-edged sword. Inflation in Spain is running at a 10 year high - at more than 4 percent - led in particular by rising food and energy prices.