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Protect yourself from the rising costs of living

You can’t have missed it – almost everything we use and consume is suddenly costing a lot more than it used to. It’s also having a marked impact on internationals abroad.

Protect yourself from the rising costs of living
Worried about rising costs? It's not just you -- prices are soaring across the globe. We find out why. Photo: Getty Images

Almost everyone has felt the effects of sudden cost of living increases, and for many it has had real consequences on where and how they live and work.

With soaring energy bills and increases in both food and petrol, consumer inflation in Europe hit 8.6 percent in June and could reach nine percent by the end of the summer. Those who moved abroad to work or study have felt the effects particularly keenly.

Together with the international health insurance provider, AXA – Global Healthcare, we investigate why costs have soared so quickly, and exactly how this impacts those who have made another country their home. 

What is driving the increase in living costs? 

While there’s no singular reason that living costs are increasing across the globe, there are several factors that we can point to as contributing to the problem. 

First and foremost, the coronavirus pandemic had a devastating effect on manufacturing industries and supply chains around the world. Worker illness, government shutdowns and disruptions to the supply of essential resources dealt a significant blow to global GDP in 2020, resulting in a fall of more than three percent. 

Restarting manufacturing and global logistics after months of effective shutdown subsequently led to a substantial rise in the costs of goods, as supply struggled to keep up with surging demand. Even with massive investment in logistics infrastructure, to date there are still lengthy delays supplying goods such as machine parts and electronics, leading to surging business costs.

Climate change has also played a role in the crisis. The increasing unpredictability of weather patterns over the past two years has meant that many regions around the world were impacted by severe weather events, including several in Europe. An increased incidence of heat waves and cold snaps have also placed a strain on gas reserves, leading to escalating power bills. 

One way to offset cost of living increases is by ensuring you are safe from unforeseen medical costs. Take a look at AXA’s range of policies designed specifically for internationals

Of course, the war in Ukraine is having a serious impact on the cost of living, most noticeably in Europe. The World Bank has suggested it could be responsible for the biggest price shock in 50 years. As a major agricultural nation, wheat prices have begun to sharply increase following the invasion, as has the price of natural gas – Ukraine holds Europe’s second-largest reserve of the resource.

Another consequence of the Ukraine war is spiralling fuel prices. As Russia is one of the world’s top three oil exporters, its current frosty relationship with the West means that the cost of oil per barrel will remain elevated. Coupled with logistical delays in delivering gas and fuel, as an ongoing consequence of the pandemic, consumers and businesses are experiencing substantially increased transport costs. 

Boiling point: Climate change is one factor increasing the cost of living. Photo: Getty Images

How do rising costs impact internationals? 

The cost of living crisis is having a significant effect on the mental health of internationals. Research by AXA – Global Healthcare, in the form of its Mind Health Index 2022 supports this idea. 

Its research, conducted prior to the current crisis, indicated that 28 percent of non-native (international) participants rated their stress level between eight and 10 (out of 10), while 35 percent of non-natives said that financial stability was an issue causing stress. Thirty-nine percent of non-native participants believed that they faced an uncertain future when it comes to work and finances – a massive stressor, regardless of where you may be. 

The causes of this are also clearly identifiable. Primarily, many internationals simply do not have the assets to sustain repeated price shocks in terms of food or energy costs. A survey conducted by market research firm, Finaccord, found that approximately three-quarters of internationals worldwide are individual workers – ie. depending on a single income.

A further third are also students, meaning that they are paying tuition costs while trying to support themselves, whether with a local job or payments from home. Quite simply, many internationals cannot afford to pay much more for necessities, particularly at a time when wages have stagnated. 

Many internationals also lack the kind of support networks that would let them otherwise overcome economic turmoil. Earlier research by AXA revealed that 87 percent of participating internationals felt isolated and cut off from family and friends, who would otherwise be able to assist and share costs.

As a consequence, further research conducted in 2019 by AXA – Global Healthcare revealed that one in five participating internationals would return home should prices continue to rise – even though over 50 percent reported that they enjoyed a better salary and quality of life than they did at home.

The research also discovered that housing and tuition costs comprised the hardest financial pressures for internationals – with 51 percent identifying rent and housing costs, and 40 percent identifying education as more costly than expected. 

It could be stated, therefore, that prior to the global spike in the cost of living, internationals already found themselves in a tight spot, with the threat of having to return home looming over them. Now, with skyrocketing prices, excessive and prolonged stress is an even greater contributor to a range of illnesses. 

Internationals are more prone to sudden increases in costs of living. To ensure some certainty, explore health insurance options from the experts on living abroad, AXA

Securing an international future

Moving abroad to start a new life is a costly endeavour and one that many work for years to achieve. It’s worth it, however: the experience of working or studying abroad is suggested to have a number of economic and lifestyle benefits.

That said, navigating the financial stresses of rising costs can be challenging. 

Many internationals opt to offset the challenges of rising costs with comprehensive health insurance coverage. AXA – Global Healthcare’s research shows that a quarter of internationals worry about the cost of healthcare in their new home, and would even travel abroad to seek treatment. 

Depending on where you are, unforeseen medical costs can run into the tens of thousands, meaning the difference between getting by, and having to return to your home country.

If you’re seeking a health insurance provider that offers comprehensive coverage and a range of useful benefits, you may want to consider AXA – Global Healthcare. Operating globally, the company has over 55 years of experience in covering those living and working abroad¹.

AXA – Global Healthcare policyholders get 24-7 care from personal advisors, connecting them with excellent private healthcare from a worldwide network of doctors, surgeons and specialists.

Outside of emergency care, AXA – Global Healthcare provides a number of additional benefits. Policyholders are able to access a number of annual check ups. Special care is available to those diagnosed with cancer, and mental health issues aren’t ignored – the AXA – Global Healthcare Mind Health Service¹ means that you have professionals for support wherever you may be. 

As an international, dealing with the rising costs of living can be difficult. However, you can ensure that should something happen to you, you can avoid unexpected financial burdens.

Furthermore, with AXA – Global Healthcare’s range of additional services, you can make sure health problems are identified before they become a problem, allowing you to focus on living, working and enjoying life abroad. 

Find out more about AXA’s Virtual Doctor service, mental health support and other services offered so you can enjoy life abroad with the knowledge that you’re fully covered

¹AXA has been providing International Private Medical Insurance for over 55 years

²The Mind Health Service is provided by Teladoc Health,

AXA Global Healthcare (EU) Limited. Registered in Ireland number 630468. Registered Office: Wolfe Tone House, Wolfe Tone Street, Dublin 1. AXA Global Healthcare (EU) Limited is regulated by the Central Bank of Ireland.

AXA Global Healthcare (UK) Limited. Registered in England (No. 03039521). Registered Office: 20 Gracechurch Street, London, EC3V 0BG, United Kingdom. AXA Global Healthcare (UK) Limited is authorised and regulated in the UK by the Financial Conduct Authority.

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ENERGY

EXPLAINED: Why are French energy prices capped?

As energy prices soar around Europe, France is the notable exception where most people have seen no significant rise in their gas or electricity bills - so what lies behind this policy? (Hint - it's not just that the French would riot if their bills exploded).

EXPLAINED: Why are French energy prices capped?

On most international comparisons of rising energy prices, France is the outlier – but the government control of energy prices is not in fact a new policy and was in place well before the Russian invasion of Ukraine sent gas and electricity prices soaring.

At present prices for domestic gas are frozen at 2021 levels and electricity prices can only increase four percent per year. According to economy minister Bruno Le Maire, without these measures French bills would have risen by 60 percent for gas and 45 percent for electricity.

Both these measures – collectively known as the bouclier tarifaire (tariff shield) – are in place until at least the end of 2022, and could be extended into 2023.

The extension of the price shield was confirmed by parliament earlier in August – part of a €65 billion package of measures aimed at tackling the cost-of-living crisis – but had been in place for much longer.

Tariff shield

The reason that gas prices are frozen at 2021 levels is that the freeze came into effect on November 1st 2021 – well before Russia’s February 2022 invasion of Ukraine.

The measure was initially put in place to help people deal with the economic after-effects of the pandemic, but was extended in the spring of 2022, when electricity prices were also capped at four percent.

Price regulation

But although prolonged price freezes are unusual, the French government involvement in price-setting is completely normal and during non-freeze periods, a rate is set each month.

If you read French media (or The Local), you’ll notice regular articles on ‘what changes next month’ which include gas and electricity prices, usually expressed as a month-on-month percentage rise or fall. This refers to the maximum rate that utility companies are allowed to increase their charges per month.

The government-set rate refers to the basic price plan from EDF. Some people are on special deals or time-limited tariffs, so if their deal or payment plan ends and they go back onto the basic rate, they can see a rise above the government rate.

Around 85 percent of households in France get their electricity from EDF. 

State-owned utilities

So, why is the government involved? Well, it’s the majority stakeholder in EDF, the country’s largest electricity supplier, and owns Gaz de France (Engie). 

At present EDF isn’t completely state owned – although there are plans to fully nationalise it – but it owns 84 percent.

The French state owns a lot of service and utility companies including the country’s rail provider SNCF, postal service La Poste and France Télévisions. One notable exception is the country’s autoroutes, which are run by private companies, although the government sets limits on toll charges. 

Nuclear 

France is less exposed to energy shocks than some other European countries because of its nuclear sector.

It is unusual among European nations in the size of its nuclear industry – around 70 percent of electricity comes from its own domestic nuclear power plants, although during the heatwave several plants have had to lower output as rivers have become too hot to effectively cool the reactors. There are also ongoing technical issues that have seen some of the older plants shut down or forced to lower output.

READ ALSO Why is France so obsessed with nuclear?

France is usually a net exporter of electricity, but at peak times it has to import electricity, usually via the high-priced international spot market.

It does, however, import its gas, mostly via pipeline – in 2020 its biggest supplier was Norway, followed by Russia.

The French government has launched a sobriété energetique (energy sobriety) plan to cut its total energy consumption by 10 percent this year, which it hopes will allow it to get through the winter without Russian gas. 

Riots

Even before the recent €65 billion aid package, the French government was taking a pro-active role in helping people deal with rising prices – from the price shield to fuel rebates for drivers, €100 grants for low-income households and financial aid for industries such as agriculture and logistics so they could avoid passing prices on the consumers.

Cynics say this happened for two reasons – because there were elections in April and June and because the French would riot if their utility bills suddenly doubled.

There’s a kernel of truth in both – cost of living became a major issue in the April presidential elections and one that far-right leader Marine Le Pen very much made her own from early in the campaign, leaving Emmanuel Macron slightly on the back foot, although in truth his government had already introduced several measures to ease the burden on ordinary voters.

It’s also true that the French have a robust approach to holding their government to account, and high living costs have previously inspired noisy and sometime violent protests – the ‘yellow vest’ movement of 2018 and 19 began as a protest over living costs.

But it’s also true that the French State is generally quite involved in people’s everyday lives – as evidenced by those monthly gas and electricity price rates – and taking a laissez-faire approach such as that seen in the UK would be unusual for any French government, even outside of election season.

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