Yahoo Finance London 'cheaper than New York or Tokyo' after pound's Brexit plunge
London has become the cheapest of the world’s major global centres, with the cost of living falling behind that of New York, Paris and Tokyo to its lowest level for two decades.
The city’s tumble down the Economist Intelligence Unit (EIU) world rankings is almost entirely due to the Brexit-inspired 15% fall in the value of sterling since the EU referendum last year. The pound’s fall has made prices in London much cheaper for foreign visitors, although not for local residents who earn their incomes in sterling.
The EIU said London is cheaper than New York for the first time in 15 years, and that relative prices in Manchester have fallen so far that the cost of living in the city is now on a par with Bangkok.
“While the declines mean that British cities are cheaper compared to their international peers, the rise in import prices caused by the weak pound will mean that locals won’t see their own shopping baskets falling in price. In fact the opposite is likely to be true and, while UK cities fell down the ranking local prices for the basket of goods surveyed have begun to creep back up,” said the EIU.
The world’s most expensive city is Singapore, where average prices are 20% higher than in New York and one-third more than in London. The city-state has long been the most expensive place in the world to buy and run a car, but the EIU said it is also the second-priciest destination in which to buy clothes.
Australia and New Zealand are also pricing themselves out of the price bracket of budget-conscious travellers. Sydney, Melbourne, Auckland and Wellington all now feature in the world’s top 20 most expensive cities and each of them are pricier than London.
Almaty in Kazakhstan takes the prize as the cheapest city in the world, although local citizens won’t feel that way. They are suffering from galloping inflation – approaching 20% in 2016 – but as it is has also sent the local currency, the tenge, down 50%, to foreigners the city is now very cheap. A large loaf of bread is around 70p, petrol is 40p a litre and cigarettes are 80p.
The EIU compares more than 400 individual prices across 160 products and services, including food, drink, clothing, rents, transport and utility bills. Prices are converted into US dollars, with each city ranked above or below New York. So, in the survey, Singapore scored 120 (20% higher than New York) while London scored 89, or 11% less than New York.
London’s new-found bargain-basement status has encouraged a flood of international shoppers to the city. Even low-cost clothing store Primark has reported strong sales to foreign tourists, joining luxury brands such as Burberry in enjoying a boost in sales from visitors drawn by the cheap pound.
But the EIU figures are also a warning to City of London firms considering a post-Brexit transfer to a Paris base. The cost of living in the French capital is now 20% higher than London, although Frankfurt and Dublin are roughly equal in prices to London.
The ten most expensive cities in the world
Rank City World Cost of Living index (New York=100)
Singapore 120
Hong Kong 114
Zurich 113
Tokyo 110
Osaka 109
Seoul 108
Geneva 107
Paris 107
New York 100
Copenhagen 100
London 89
Manchester 77
Source: EIU. Based on prices of 160 items translated into dollars, then ranked with New York as 100.
