WHAT DOES BREXIT MEAN FOR YOUR MONEY?
THE Brexit fiasco seems to have dragged on for decades with lots of uncertainties and concerns for everyone.
When the transition period ends on December 31, one question will finally be answered – will we have a trade deal or no deal?
But another won’t just yet – the impact on our finances.
A total of 54% of people quizzed by consumer champion Which? felt Brexit would have a negative impact while just 5% went for positive.
Which? money editor Jenny Ross says: “Regardless of a deal or not, it’s important to remember that financial and legal protections for people will remain in place.
“But if a deal isn’t agreed by the end of the year, consumers could see food costs rise and may pay more for insurance when travelling to Europe.”
We’ve teamed up with Which? to answer your concerns around your finances:
Will I lose legal financial protection?
Not in the short term, regardless of a deal or not.
EU protections now copied into UK law include the right to open a basic bank account, a ban on credit card surcharges, no gender discrimination regarding insurance and bank deposits protection through the Financial Services Compensation Scheme (£85,000 per person per bank/up to £170,000 per couple).
What will happen to my savings?
Saving providers tend to use the Bank of England’s lead when it comes to setting interest rates, raising and lowering them as the base rate changes. Hence why rates are virtually negligible on most accounts, with a base rate of just 0.1%. The Bank sets the rate to keep inflation low and stable.
The two emergency base rate cuts since March were over pandemic concerns and its effect on the economy, not Brexit.
While the average instant access rate is 0.29% and one-year fix 0.56%, there are slightly better rates out there, such as Saga’s 0.70% easy access account and Paragon Bank’s 0.80% one-year fix.
Will I pay more for travel insurance?
Possibly, because from December 31 you won’t be able to use the European Health Insurance Card (EHIC) for medical treatment. This gives access to state healthcare at the rate local citizens pay, which can be free but not always.
Currently the Government has no plans to extend the scheme, even if a deal is signed, meaning travellers will need to rely on travel insurance alone. More claims will lead to higher costs for insurers, which could be passed on via higher premiums.
Will mobile roaming charges be back?
If no trade deal eal is agreed, mobile firms will be free to charge more for using ng their services s in the EU. These can be hefty – up to £30 to upload a 5MB photo. However, EE, 02, Three and Vodafone say they’ve no plans to start charging UK customers when they’re in EU countries.
What about my pension savings?
Your pension is most likely invested in the stock market, or at least part of it. The outcome of Brexit may cause economic uncertainty and movement in the financial markets that may affect pension schemes and investments when the transition period ends. Should there be a concern that the UK will be harmed by Brexit, the stock market will reflect that. But remember losses can be short term – and markets can recover.
Pensions are a long burn and investments do go down as well as up over the years.
Some volatility could be good for younger and middle- aged workers as their monthly pension contributions can buy more investments when prices dip, giving the chance of bigger returns when things pick up.
Will shop prices rise?
The Government says a deal shoul should ensure no tar tariffs or other ch charges on goods from the EU. Without a deal, UK tariffs would apply.
The British Retail Consortium estimates 85% of imported foods would face tariffs at an average of more than 20% – including 48% on beef mince, 57% on cheddar and 10% on lettuce – and additional costs will end up passed on to shoppers. It’s not just food, other imported items could cost more.
The Society of Motor Manufacturers and Traders says cars could cost an extra 6.3% under a no-deal.
Regardless of a deal or not, financial protections for people will stay in place
What if I’ve retired in the EU?
Current arrangements to reduce double taxation are not expected to change, deal or no deal.
However, managing your finances could become harder without a deal.
While the state pension can be paid to a EU bank account – and will continue to rise with the triple lock – private pension firms wouldn’t have an automatic right to make payments abroad without a deal.
So, you may have to have private pensions paid into a UK account and transferred – but that will mean transfer fees.
Unfortunately, you may also struggle to find a UK account.
In September expats were given a nasty shock when Barclays, Coutts and Lloyds told non-UK resident customers their UK accounts would be closed.
Passporting – which allows banks in the EU to trade freely in any other state in the European Economic Area (EEA) without the need for more authorisation – could stop for the UK in the event of no deal. So they would need to hold a licence with every EU country they operate in.
If you want or need a UK account, you’ll have to approach banks to find which may get the required licence for your country of residence.