From fuel to finance: how Brexit will affect you
Q Is my pension in danger?
A George Osborne had warned that Brexit would lead to the end of the “triple lock” on state pensions that guarantees an increase each year, even in times of zero inflation. But that threat was allayed by Conservative MPs who said they would not back any such emergency budget measures. Private pensions, linked to stocks and shares, were hit by the initial dip in the market which took about £100 billion off share value in FTSE-100 listed companies. But the market rallied and any impact on pensions will be lessened because only about half of pension funds are held in shares.
Q What will this do to the value of my house?
A Most experts predict a drop in house prices although when, and by how much, is open to speculation. The drop could be anywhere from 5 to 15 per cent although it may just be that the current rise flattens out, which is no bad thing. Treasury forecasts suggest homes will be £20,000 cheaper than if we remained in the EU and some buyers will be tempted to pull out of agreed deals, hoping to get the same or similar property cheaper if they wait. However, a fall in sterling’s value could encourage overseas buyers. Some experts predict a “Brexit bubble” in expensive parts of London such as Mayfair and Kensington.
Q Will my mortgage payments go up?
A That all depends on interest rates. They could go up to shore up the pound or else down to stimulate the economy. Negative interest rates are even a possibility. Each 0.5 per cent rise or fall adds or subtracts about £25 a month on a typical £100,000 mortgage. The Treasury had claimed Brexit could add £350 a year to the average home loan.
Q Will my savings be affected?
A Brexit should have little or no impact, given paltry interest rates at present. A move to negative rates could be a problem but a rise will help savers. The Government’s guarantee that the first £75,000 of savings would be repaid if a bank were to fail was underpinned by an EU regulation and so could, in theory, be repealed in future. Not one to lose sleep over.
Q Are petrol prices going to go up?
A A rise in the price of petrol is likely to be the first thing that consumers notice as a result of Brexit. Crude oil is priced in dollars and with sterling falling against the dollar that will make importing petrol more expensive. On the other hand, the cost of crude oil actually fell on Friday amid fears of a worldwide economic dip as a consequence of Brexit. It is reckoned to take 10 days for the price of petrol on the forecourt to change as a result of currency fluctuations. Expect 2p to 3p extra on the cost of a litre within a fortnight.
Q What about my shopping bill?
A With sterling down, imports will be more expensive. Electrical goods, such as televisions and ovens, as well as clothing shipped in from Asia, are usually bought using dollars so any continued drop in the pound against the dollar will hit prices. Some experts were predicting rises of as much as 10 per cent. But nothing should happen too fast because goods are bought in advance and most retailers take out insurance to protect against currency fluctuations. Changes will be felt by late 2016 at the earliest. Food prices could rise more quickly, although supermarkets will probably take the hit on some extra costs. It is claimed Brexit could add £580 a year to household food, drink and petrol bills.
Q And what about my energy bills?
A Boris Johnson and Michael Gove have said the 5 per cent VAT on energy bills could be scrapped, saving taxpayers £2 billion a year. The EU imposed a ban in 1993 on member states cutting VAT on energy bills below 5 per cent. Scrapping VAT on fuel would save an average £60 a year. George Osborne has said VAT on energy is, if anything, more likely to rise post-Brexit because tax receipts will fall in a shrinking economy and VAT will be needed to make up the shortfall.
Q What will it do to the cost of my summer holiday?
A The value of the pound plummeted against both the dollar and the euro on Friday, before recovering a little. For holidaymakers, it simply means the pound in your wallet is worth less abroad, making the cost of everything from dining out to taxis and shows more expensive. The pound was worth $1.37 and €1.23 yesterday while this time last year it was worth $1.57 and €1.40. In other words, a family that got by on £1,000 spending money in Europe last summer will now need an extra £138 – a rise of 14 per cent. A family trip to the US will need an extra £146, or almost 15 per cent. Most advisers suggest that you hold off on buying foreign currency for now, in the hope that the market will start to settle down after the seismic shock of Brexit. Thomas Cook’s suspension of its foreign currency service remained in place yesterday after a rush to buy prompted fears that it would run out.
Q Will I now need a visa to travel to the EU?
A For the next two years at least, Britons will continue to enjoy visafree travel to the European Union. The chances are that that will remain in place because we enjoyed visa-free travel to much of Europe even before we joined the EU. Citizens of non-EU countries such as Switzerland and Norway don’t need visas and the likelihood is that we won’t either. But beware, in future we might have to start queuing in lanes reserved for non-EU citizens at ports of entry.
Q What if I’m an expatriate living and working abroad?
A The hundreds of thousands of British expats living in places such as France and Spain will not be affected for at least two years during the EU withdrawal process. After that, a lot will depend on negotiations over free movement. Lawyers have argued that under the Vienna Convention of 1969, the termination of a treaty should not affect “acquired rights” under international law. In other words, for Britons already living and working in the EU their circumstances should not alter. The same is true for Europeans living and working in the UK. But Britons wanting to work in the EU in future might well require work permits and visas. A lot will depend on whether future UK governments try to curtail European migration.
Q What about my passport and driving licence?
A Again nothing will change in the short term. Both passports and driving licences, which currently carry EU flags, remain valid but will need a redesign. It’s unlikely the Government will recall them but simply phase in EU-free models. Expect a campaign for the return of the old-fashioned dark blue, stiff passports.
Q Will I still get health cover within the EU?
A The European health insurance card (EHIC) provides emergency health treatment across the EU on the same terms as that country’s own citizens. The terms of the EHIC will have to be renegotiated but because it also covers Switzerland, Norway and Iceland it should be fine.
Q Won’t the cost of calls using my mobile phone abroad go up?
A The EU had brought in a regulation that would scrap “roaming” charges in 2017. That will prevent mobile phone companies from penalising Britons using mobile phones in other EU countries. But, post Brexit, the Government will need to introduce a law to ensure roaming charges stay scrapped in EU states. Money: Pages 1-5