For such a long time Brexit filled the news, but this now seems like such a distant memory. At the time, we were all pretty tired of hearing about it, and yet, even after leaving the EU on 31st January, we’re still not sure what impact Brexit will have on us in the future.
It’s unsurprising that with the rollercoaster that has been this year the end to the Brexit transition period seems to have crept up on us. It remains a case of only time will tell, but we thought it would be handy to give you a little recap of what changes we can expect from 31st December and what they mean for your finances.
What can we expect from Brexit?
Way back in 2016 we voted to leave the EU by 52% to 48%. In January, we officially left the EU as the UK committed to a “hard exit”, quitting the single market and customs union. And since then we’ve been in a “transition” period, continuing to follow EU rules, while the government tries to negotiate a trade deal.
The final break away from the EU will take place on 31st December.
While we can expect the changes to be clearer at this point, here’s what we know so far:
Following the EU referendum in 2016, the pound lost value against most currencies, dropping 10% against the US dollar and over 7% against the Euro. Since the added knock of the pandemic on global financial markets, the pound has weakened more. However, this inevitably comes with any uncertainty. The outlook at the pound post-Brexit hangs in the balance of whether we have a deal or no deal come 31st December.
What will this mean for your finances?
The COVID-19 lockdown earlier in the year put the housing market on hold temporarily, but with demand building and the stamp duty holiday, house prices have been at a new all-time high. So, despite predictions that a ‘no deal’ Brexit and the repercussions of Covid would see house prices fall drastically, they rose by 2% in August – the highest monthly rise in 16 years.
However, economists, believe the property market is in a delicate position, so an unfavourable deal and trade issues, could cause a dip in the housing market.
In the UK, 12% of gas and more than 5% of electricity is imported from Europe. After leaving the EU, trading could become less efficient, leading to increased energy prices.
Food prices could increase as a result of exportation costs and the weakening of the pound.
And the cost of car insurance could rise, as it may become harder to source parts for repairs.
Savings and pensions
In March 2020, The Bank of England lowered the base rate from 0.75% to 0.1%, and it’s looking very likely that interest rates will stay at this level throughout 2021.
The Financial Services Compensation Scheme will continue to protect your cash up to £85,000 per bank, provided it’s a UK-regulated bank.
As for EU banks operating in the UK, the government have introduced a ‘temporary permissions regime’ post-Brexit, which allows firms that are already open in the UK to continue their operations here for up to three years.
At the moment, if you’ve moved abroad to Europe, and receive your State Pension, thanks to an agreement with the EU, you will receive annual increases to your pension, as you would do in the UK. The government have confirmed that this will continue for existing ex-pats until March 2023, but increases for those moving abroad post 2020 will depend on Brexit negotiations.
To check how Brexit might impact you based on your specific set of circumstances, you can take a short quiz on the government website here, and it’ll give you a complete list of personalised actions.
Things to consider
As we mentioned above, there are things to consider about your state pension if you are an ex-pat living in the EU. As well as state pension increases being uncertain, thousands of UK bank accounts will close for those living in Europe. Lloyds, Halifax and Barclaycard are some of the banks that have started closing accounts in preparation.
So, this will make the dream of a place in the sun a bit harder. But not impossible.
Stock market uncertainty
Whatever the deal, there will be fluctuations in the stock market. And there’s no real way of knowing whether this will be for better or worse. We suggest you try to avoid the noise of the media and talk through your concerns with a financial adviser.
Market uncertainty has been a running theme this year, so it might be useful to take a look back at what this year has already taught us.
Brexit and your business
If you’re a business owner, Brexit has probably remained on your radar for some time. Hopefully, you’ve started to prepare your business for any known changes as best you can. And if you’re not expecting it to affect you much, it’s generally good practice to have your business in the best shape it can be in to survive potential volatility.
From early 2021 (exact date to be confirmed) UK citizens will still be able to travel to the EU for short-stay trips – for up to 90 days in any 180 days without a visa. However, there will be a £6 visa-waiver for holidays. This fee will pay for an electronic pass that allows British citizens to go on short holidays for three years before a renewal is due.
British passports are turning blue, but you won’t need to change it right away. You can continue to use your existing passport until it expires.
From 2021, when you travel to anywhere in the EU, your passport must be less than 10-years-old and have at least six months left on the day of travel. Check your passport here.
There is uncertainty surrounding the future of the European Health Insurance Card (EHIC). However, you can apply for one before 31st December, so it might be worth applying for a new card or renewing yours if needed. And if you don’t have an EHIC, you’ll need to take out appropriate insurance cover when you travel to the EU, as you would anywhere else.
Although there are a lot of uncertainties surrounding Brexit, there is one thing for certain things will change.
However, we’ve been handed our fair share of changes this year and become more resilient as a result.