How would Brexit affect your pocket
How would Brexit affect your pocket
It’s been three years since the referendum regarding Brexit and there is still major uncertainty about what will happen. While everything is still in limbo, it’s difficult to predict what the future holds. This can be worrying, if the effect of Brexit on your finances concerns you.
The truth is that there is no certainty about how Brexit will affect your pocket. However, you can plan ahead using the information that is available. Doing this means you are protected no matter what happens.
The financial effect of Brexit so far
It helps to start by looking at the difference Brexit has made to your pocket so far. One of the big differences is that the pound in your pocket is not worth as much as it used to be. At the end of 2015, £1 would buy you around €1.40. Today £1 is worth around €1.14. That is a 15% drop in the value of the pound in your pocket.
There are two ways in which the drop in the value of the pound affects you.
- You get less for your money when you travel abroad. A night out in Spain that costs you around £90 now would have cost you £70 before the referendum.
- You pay more for goods in the shops at home. This is because businesses pay more to import goods from abroad. It’s estimated that prices are around 2% higher than they would be if the value of the pound had not decreased.
So Brexit has already made a difference to the value of the money that you have in your pocket. What does the future hold?
Possible effects of Brexit on your finances
It’s difficult to predict exactly what will happen regarding Brexit. If the Prime Minister’s deal goes through we will be in a period of negotiation until 2020. This means that nothing will really change until that point. However a no-deal Brexit could bring about significant changes much earlier. Not achieving a deal could also mean a further drop in the value of the pound.
The following advice should prove helpful no matter what the outcome.
Brexit has had little impact on the housing market so far. In some areas of the country the average house price has risen substantially. However, some experts predict that new build houses will become more expensive to buy after Brexit.
This is because post Brexit immigration laws may make it more difficult for European builders to work in the UK. Using UK labour is more expensive. As a result, the sale price of new build homes could increase.
A rise in the cost of day-to-day living expenses is more likely to happen in the event of a no-deal Brexit. This is because the UK imports most of its food from the EU. It also sources some of its energy from the EU. If there is no agreement over trade, the cost of importing could substantially increase. The value of the pound is also likely to decrease.
If this happens you will pay more for food in the shops. You may also find that your energy bills increase. If a deal can be made there should not be a significant increase in prices.
Holidaying in the EU
You may be wondering how Brexit will affect you if you want to travel to the EU. Again, this depends on whether or not there is a deal. There is a worst case scenario where large customs queues would form. There could also be flight delays and cancellations.
If you are thinking of travelling to the EU later this year, or in 2020, you should be cautious. Check the fine print of your insurance and make sure that it covers you if there are delays.
There is also a possibility that you may not be able to use the EHIC health insurance benefits. The UK government and the EU want these benefits to continue after Brexit, but nothing is certain. This makes good holiday insurance more important. This could mean that you need to pay more for your insurance.
Protecting your pocket after Brexit
You should not become too stressed over what will happen post Brexit. It’s unlikely that you will end up in a dire financial situation. However, you can help yourself by planning now. Think about putting some money aside in case there are financial repercussions. This means that you can have complete peace of mind no matter what happens regarding Brexit.
If you are considering a loan please make sure you can afford to repay it back in time. Late repayments can cause you serious money problems. For help please go to moneyadviceservice.org.uk