Menu Close

A bit of cost comparison, UK vs US

I have long planned to write an entry on the cost of living comparison between London and New York/New Jersey area. Such an endeavor, being of questionable value from the start, is certainly hard to make compelling. Or exhaustive. At long last, I decided to still do it, but in a limited form.

First, a bit on the thought process.

Factoring in the current exchange rate makes many things in England outlandishly expensive in dollar terms. Those who had recently visited us and later perused their credit card bills in horror, will understand what I mean. There is literally almost nothing that would not cost more in England today than in the US based on the exchange.

But I am not paid in dollars. To me, the exchange rate is meaningless. A pint of beer at a pub does not make my bank account $9 lighter; only £4.50.

I tried to look for some sort of purchasing parity denominator to intelligently compare costs. For instance, identify some representative level of income on both sides of the pond and calculate the percentage of it that a product or service costs. But I am surely not so dedicated to the task of educating my audience as to spend my time on such academic exercise.

Therefore, my conclusions are a bit esoteric. In some cases, they rely on the perceived impact to the bottom line. In others, they adopt a regardless-of-the-exchange-rate approach…

Well.

London is widely accepted as one of the most expensive cities in the world. 95% of that is property prices. Only the most fortunate among us can afford even a smallest flat in the city center, and even looking further out you are likely to have to spend inordinately for acceptable housing. We live quite far away from the center, in a house that is significantly smaller than the one we had in New Jersey (although it compensates with the garden), and even in simple numeric terms, our rent is higher than what we used to pay mortgage-wise.

But take the cost of housing out of the equation, and the cost of living comparison evens out. Yes, many things are considerably more expensive, while some are actually cheaper, but there is no dramatic gap in what your expenditures would be on opposite sides of the Atlantic.

Take property taxes. They are replaced by council tax in London, which is payable not by the owner of the property, but rather by the occupier. For those of us who are used to paying thousands and thousands of dollars in property taxes in New Jersey, the council tax, at £1500, even converted to dollars, is not too taxing.

Or utilities. It is certainly a function of how much – or, rather, little – we have to heat/cool our dwellings during the year, but the total utilities expenditure is easily 25-30% less than what we’d pay in New Jersey, in dollar terms.

Television and especially internet are further examples of cheaper services. In many cases, depending on your phone or TV plans, you can get broadband internet connectivity completely gratis. And that does not mean at all that you have to sign up for some outlandish other costs.

Gasoline, on the other hand, is universally considerably more costly. Where in America you may pay under $3 per gallon, we pay roughly £3.50. No need to convert.

Supermarket food is more expensive. The general impression here is that supermarket prices are a tad bit lower numerically than the ones in New Jersey. But in sterling.

Fruits and vegetables at suburban farmer markets, though, are incredibly cheap, literally a single pound sterling for a sack, in many instances. This, of course, varies widely. A similar market somewhere in central London will surely be more expensive. My comparison in this category is between the market in Lewisham, Southeast London, and, say, the farmer’s market on Route 9 in Sayreville, if that still exists.

Mobile phone plans are considerable more expensive in England. However, for light mobile users, pay-as-you-go plans coupled with never having to pay for any incoming minutes can mean an ability to use the cell phone practically for free.

I have already mentioned in the past our landline international calling plan. We do not pay an extra penny for any call made to a US landline, in addition to 35 other countries. No matter how cheap your international calls are, I don’t think any US company have yet come to offer them for free.

Public transportation, if you are a tourist, looks expensive. But there are so many all-you-can-travel discount plans that, if you are a local, or get on with the program of using Oyster Card on the tube, you will find that you are spending very little on public transport (although, if you only make one round-trip trip on the Underground a day, even with Oyster you’ll pay £4 daily).

Even better, travel cards cover any mode of public transportation operating within zones that they are valid for, including commuter trains (but excluding water ferries, I think). So, if you get a monthly train pass to commute between your home in Zone 6 and the central London, which is Zone 1, it already covers city buses and the Underground within the four zones, absolving you of any responsibility to pay anything else. Let’s see, is NJ Transit monthly pass accepted on NYC subway?…

Among the trivial expenses (and again, comparing suburban locations), a haircut costs me £7 in a salon around the corner from our house. I know quite a number of hair salons in New Jersey, and I was never charged less than $14 at any one. But often more, and for a questionable outcome…

And on that note, I’ll conclude this treatise. If anyone is interested in a specific product or service comparison, feel free to give me a shout, and I’ll add the info in this space.

[addendum June 2008]
Takeout and delivery food is marginally more expensive here, although it certainly all depends on how much you order. I seem to always end up paying between £15-20 for delivery (except when ordering a single large pie from a nearby pizzeria – £9-12), but then I think whenever we ordered Chinese in New Jersey, we would spend in the vicinity of $25-30 for the family.

At our neighborhood Chinese takeaway in Mottingham, you can have a plate for £4, but rice will cost extra. This is one of those expenses which numerically ends up to be the same as in the US, which makes it fairly expensive whether you choose to convert it into dollars or simply consider that they represent a larger percentage of a British income.

For lunch, if you are looking for something hot and fresh, you are likely to spend between £5.50 and £8 for the simplest fare, including a drink. Pre-packaged sandwiches at Pret-a-manger and the like may cost under £3, if you prefer that type of food.

As far as dining out, the minimal choice of one main course and a drink will come to £12-15 in pub fare and £17-25 at a mid-market restaurant. Your appetite will define the rest. In general, the menu prices at eateries in England of comparable status and quality to those in the States, are about 30% lower in numeric terms, which again makes them quite expensive when converted into dollars.

Alcoholic drinks still carry some premium over soft drinks, at least when ordered with a meal. I cannot offer an intelligent comparison to the States for either category of drinks, on account of having a virtually non-existent sample of the bar drinks’ costs Stateside. A pint of tap beer in a London pub could cost anywhere from £3 to £7, a glass of wine about the same, and I have not been around hard liquors enough to know their costs.

Posted in Expat Archive

7 Comments

  1. D. Morgan

    We are visiting London at the end of march, 2008. With a bus load of shop-hungry teenagers from the US, we are wondering what we can expect to pay for ‘take home things’ like clothing, jewerly, etc. If you have location suggestions (good market places, etc), that would be great also. We like the discount paths the best.

  2. Ilya

    I am, unfortunately, not well-placed to answer a question like this, since we do almost no shopping of this kind ourselves. From a high-level perspective, though, you never come to England to buy clothes, as it is universally more expensive (I’ve heard of quite a number of people who go on a clothes-shopping trip from Britain to the US, so you can make your own inferences here). Jewelry, souvenirs and mementos obviously vary in price depending on tastes.

    Markets are certainly the best place for bargain-hunting. The most popular one, Camden Market, is open seven days a week (it has now re-opened after a recent fire) and will likely satisfy many tastes. Spitalfields Market is a great place as well. There are plenty of others, go to London Markets for all the variety there is.

    Hope this helps.

  3. Drew

    What about restaurants? I have heard from two people that Chinese take-out is about $30 per person, just from an ordinary place. Are there restaurants where you can eat for $10 or less? Also, how do alcoholic drinks compare to the US? I seem to remember there not being a premium on alcohol there like there is in the States — i.e., a Coke would cost about the same as a beer.

    Thanks for writing your blog!

  4. John the Scientist

    You also have to consider that the natives are paid less than comparable workers in the US (in terms of purchasing power, however you define it) and taxed more. Your ex-pat package likely softens this blow.

    Our British colleagues grouse about our higher salaries sometimes. My reply is: “give me back 4 weeks of your yearly vacation, and you can have my salary”. Heh. Very few Brits come to NY to take us up on that offer. 😛

  5. John the Scientist

    I forgot to mention that I found much the same dynamic when I lived in Japan. Much of the sticker shock foreigners evince is due to tourists getting fleeced at hotel restaurants or not knowing how to minimize costs. I can get you a really good fugu meal for under $10 per person. And yes, the chef is licensed. You’ll pay upwards of $50 for fugu in the Hyatt or Hilton restaurants.

    I wrote about that a bit in my Japan post.

  6. Ilya

    Well, I think I have a pretty good argument that I am taxed more than a local, having to pay not only the UK taxes in full, but also something to Uncle Sam on top of that. My ex-pat package potentially softens a blow only in that I am rather well-paid…

    And the vacation – that will be the hardest thing to give up when we re-patriate…

    I agree with the notion of the sticker shock coming from not knowing how to live like a native. I attempted to stick to non-tourist, but also non-bargain-hunting examples here…

Comments are closed.