Britons living in France lost an old friend this week. French News, the Dordogne-based newspaper that served the fast-growing expatriate community for two decades, went into liquidation.

The demise of the monthly newspaper, which had a readership of about 130,000, is a symptom of the bleak times facing thousands of Britons who joined the French good life. Some are giving up and joining what one removal company called an exodus across the Channel. “ ‘French dream turns into nightmare’. There is truth in that,” said Miranda Neame, the editor and co-owner of French News. She was quoting one her recent headlines about Britons who could not afford medical treatment.

Ms Neame, 53, who moved to western France in 1975 at the start of l’invasion anglaise, had to make 21 employees redundant. The end of the newspaper is considered locally as a sign of the depth of British distress.

“It was a great adventure while it lasted,” Ms Neame told The Times. “The money just stopped circulating.”

Ms Neame said that her trouble stemmed partly from internet competition but she observed a constant “slow drain out of France” by Britons who can no longer make ends meet. “A lot of our readers are suffering,” she said.

The concern about medical bills at the end of last year was the start of lean times for everyone on sterling incomes or with businesses serving Britons and second-home owners. The market for homes favoured by Britons has collapsed, from Brittany to the Mediterranean, and the pound has shrunk by 22 per cent against the euro since September 2007.

Pensioners are being hit hardest. In a typical case the 91-year-old mother of Irena Czekierska, 50, a British teacher in the Dordogne, is no longer able to pay for her French state retirement home. “Her British teacher’s and old age pension has shrunk from €1,600 to about €1,300,” said Ms Czekierska.

Charles Gillooly, the chairman of the Dordogne branch of FNAIM, the French estate agents’ federation, compares the crunch with the negative-equity period of 1991-92. “Britons have been doubly hit. We have a property crisis which is compounded by a financial crisis,” he said.

Sales of the old stone houses that the British buy have fallen by 50 per cent in the area and he advised Britons to avoid selling.

British companies in the building trade and people running holiday gîtes and expatriate services are also in difficulty. The Franco-British Chamber of Commerce in the Dordogne said that requests for starting businesses had dropped from 100 a day to sometimes zero.

At Eymet, the very English village that is the unofficial capital of Dordogneshire, the expats are not fleeing. “Things have gone very, very quiet here this year. People are not going out like they used to,” said Simon Colebourn, who owns a café.

The problems have hit Britons with sterling incomes across France, especially those with euro mortgages. In the relatively prosperous Riviera zone Britons are suffering, said Anita Rieu-Sicart, the editor of the Var Village Voice newsletter.

“My readership and friends are all feeling the bite. They are on pensions – not, as the UK Government portrays them ‘rich toffs retired to the South of France’,” she said. “They have worked all their lives.”

Businesses and British consuls in French cities said that they were not detecting a flight by British residents. However, some removal companies are reporting a boom in shipping distressed expats back to Britain.

“There is a massive return that began at the start of the year,” said Alan Brett, the transport manager of Anglo-French Euro Removals.

Mr Brett had just taken a call from a family his company had moved to near Toulouse in May. “Now they are going back to Sevenoaks,” he said.

“People are in financial difficulty. It’s not just pensioners, but also the younger ones. You’d have to be crazy to buy property now in France.”

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