Minister of Innovation, Science and Industry Francois-Philippe Champagne rents out two apartments in expensive neighbourhoods of London.Darren Calabrese/The Canadian Press
The turmoil in British politics – which led to the pound plunging to a historic low last month – has hit the pocket books of thousands of Canadians with investments and pensions in the U.K., including federal ministers who own rental properties.
Among them is Finance Minister Chrystia Freeland, who rents out a house and a flat on a street in central London near the River Thames.
François-Philippe Champagne, Science, Innovation and Industry minister, who rents out two apartments in expensive neighbourhoods of London, has also seen the value of his rents dip along with the value of the pound.
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Thousands of seniors who have lived in Britain have also seen the value of their pensions, which are calculated in pounds, fluctuate with plunges in the value of sterling.
Among them is Senator Tony Dean, a former senior federal public servant who grew up in Birmingham, England, and went to university in Hull. He said he does not rely on his British pension but sympathizes with thousands of people living in Canada who depend on U.K. pensions to help them with the high cost of living.
“With mortgage rates going up and inflation eating into wealth, it’s a double whammy, and if you include currency exchange into the mix, it’s a serious issue,” he said.
Last month, in reaction to Prime Minister Liz Truss’s mini-budget, the pound plunged to a historic low, dramatically cutting its value against the Canadian dollar.
Sterling collapsed after Ms. Truss gambled that she could cut taxes for the rich while borrowing billions of pounds to help consumers and businesses struggling with energy bills.
She was forced into a policy U-turn, and fired her chancellor in an attempt to reassure the markets and save her job.
Sterling recovered to its former value. But on Thursday, the pound dipped and then rallied again when Ms. Truss announced she will step down after only 45 days in office.
The pound’s value against the Canadian dollar has dropped by around 9 per cent over the past year, fuelled by political instability. Ms. Truss’s predecessor as Prime Minister, Boris Johnson, announced his resignation in July.
Canada holds currency reserves that include millions in sterling, the value of which has fluctuated with the turmoil in exchange rates.
Canadians selling property and other assets in the U.K. and receiving rents when the British pound collapsed last month saw their income plunge when they converted the funds to Canadian dollars. Some decided to keep their money in the U.K. until the pound recovered.
The Finance Minister, who worked in London as deputy editor of Financial Times, bought a red-brick, terraced house, which used to be social housing owned by Lambeth Council, with her husband, Graham Bowley, in 2002.
They bought a first-floor flat opposite their house in 2004. It was previously a council flat that had been sold off. A similar property on the same street in Waterloo, South East London, is rented at £1,650 per month, according to a local real estate listings.
Ms. Freeland has declared rental income from both properties according to Parliamentary rules. Her office declined to comment.
Mr. Champagne has also declared rental income from his London flats according to the rules. He has repaid two mortgages he held with the Bank of China on the properties. His office declined to comment.
Also affected by the diminished value of the pound over the past year are 127,000 people living in Canada receiving pensions from the U.K., because they lived and worked there.
The U.K. government freezes the value of the pensions once people move to Canada.
Ian Andexser, chairman of the Canadian Alliance of British pensioners, criticized successive U.K. governments for refusing to uprate the value of British pensions in Canada to keep up with inflation.
The value of the pound and “tumultuous” exchange rates is causing added uncertainty for British retirees living in Canada, he said.
“When the pound fluctuates to the extent it has this year, it exacerbates the problems with the frozen value of the pension. It’s tragic.”