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 Business News | November 2007 
In Europe, Weak Dollar Wrecks Americans' Dreams
 Sylvia Westall - Reuters
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| | An enlarged copy of a U.S. dollar hangs on the wall above employees at a currency exchange in Paris in this September 20, 2007 file photo. The weak dollar and recent tax laws are hurting many of the 350,000 or so Americans who live in the European Union, especially those who are paid in dollars. (Reuters/John Schults |
Berlin - Andrew Curry once loved going out for dinner and drinks in Berlin, feeling far wealthier in the German capital than he did at home in the United States.
With the dollar now worth about 20 percent less than when he first arrived in 2005, the 30-year-old freelance journalist has a leaner lifestyle.
"I used to be able to brag that Berlin was really affordable but now my rent actually works out on par with Washington and New York. It's pretty terrible," said Curry, whose income is almost exclusively in the devaluing currency.
"I do everything to try to spend fewer euros now."
The weak dollar and recent tax laws are hurting many of the 350,000 or so Americans who live in the European Union, especially those who are paid in dollars.
It is being felt by students, professionals and pensioners in Berlin, Paris and London - where the dollar is at a 26-year low against sterling and, according to a Reuters poll, expected to stay above $2 to the pound for the next six months.
For those who work in the creative industries and are often self-employed, the dollar's plunge to all-time lows against the euro has hit already fluctuating incomes and lifestyles.
"The dollar is having a terrible impact on us," said U.S. writer Eunice Lipton, a New Yorker who most of the year lives in Paris with her husband, artist Ken Aptekaar.
"We earn our money primarily in the States and then transfer it here. In the last few days we have transferred $15,000 which became 10,200 euros and that is killing us," she said.
Americans making dollar-euro transfers have seen the amount they receive shrink by about 50 percent since early 2000, when the currencies were at parity.
Like other Americans in Europe, Lipton says she feels the pain of the weak dollar most when entertaining friends or going out to dinner - a popular pastime in the French capital.
"I can't complain because the Americans have had it round the other way for years. I'm in my 60s and I've been coming here since I was 19 and most of that time I've been able to eat in great restaurants for very little money," she said.
"In the past, I knew the exchange rate was great for us and I sort of gloated about it, without trying to be rude. Now our terms of reference are different. It is not amusing. I just hope it gets better."
EIN POOR BERLINER
About 50,000 Americans moved to Germany in 2006, according to the German statistics office - many attracted by its art, music, history and relatively low cost of living, according to Americans living here.
Seen as a fashionable, central city with green open spaces, Berlin is prized for what many expatriates say is a better quality of life than at home.
Those who rely on dollars now need to keep a close eye on their wallets and are finding they might not be able to live so comfortably.
"My grants have basically been cut in half with the dollar-euro exchange rate," said assistant professor Mara Leichtman, who is renting a friend's apartment in Berlin - and not shopping for clothes - to cut down costs.
Adding to Americans' woes are laws passed last year which raised the amount some pay in U.S. tax.
Monique Luegger, a Berlin-based tax adviser with American clients, said that while the new tax laws mainly affect those in the higher income bracket, the ailing dollar is hurting people who worked in the U.S. but chose to retire in Europe.
"The exchange rate is really hurting pensioners who are trying to live in Europe on a dollar income. Not a week goes by when someone asks me what they can do about the exchange rate. But of course there is nothing I can do."
Expatriate groups argue that the combination of the weak dollar and new tax laws will make Europe a less attractive destination for Americans wanting to work overseas.
"If it gets much worse - God forbid it would go up into the neighborhood of the pound - I would have to leave or focus on getting European (income)," Curry said.
Some Americans plan to stick around, even if it means home-cooked meals and old clothes.
"I love being in Europe. I lived in a small university town in the U.S., so any excuse to be in Europe is still going to be a good one, even if it does hurt financially," Leichtman said.
"It's not going to make me go back to America," said Lipton in Paris.
"It won't stay this way. (President George W.) Bush hasn't cared at all about what the dollar is worth because he is so provincial. Americans are provincial in general and most of them don't even realize what the dollar is worth overseas."
(Additional reporting by Naomi Kresge in Berlin and Crispian Balmer in Paris; editing by Sara Ledwith)
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