The United Kingdom will leave the EU on 31st January 2020. But what does this mean to ordinary Brits at home? How will Brexit impact personal finances?
Whether you agree with the decision we made or not, the United Kingdom will leave the European Union in January 2020.
Much has been discussed about the UK’s future trade, sovereignty and borders, but what does this mean to ordinary Brits at home?
And how will Brexit impact your personal finances?
In this article, we’ll look at food shopping, travel, savings and pensions, house prices and fuel to see which areas could potentially impact your household.
The UK imports a lot of its food, with the majority from the EU. Combined with a volatile pound, this will have an impact on your weekly food shop. There was an increase in food prices in 2017, but these still are lower than those in December 2015.
Yet what is really evident is shrinkflation – product prices remaining the same but the size has decreased so that food manufacturers do not have to raise prices. Food product manufacturers cite the rising cost of ingredients as to why they have ‘shrunk’ products.
The Office of National Statistics also state that these shrunk products are not related to Brexit, merely the cost of ingredients.
Whatever the reason, always ensure that you prevent yourself from paying more for your weekly groceries. mysupermarket.co.uk has a supermarket comparison website you can check which supermarkets offer the lowest prices on your favourite items.
Once the referendum result was confirmed, the pound fell 10% against the US dollar on the and 7% against the Euro. While, the pound has recovered since, it hasn’t reached pre-Brexit voting levels.
If, like most Brits you holiday abroad once a year then the weaker pound means you’ll also now pay more. The value of the pound against the euro has fluctuated since the Brexit vote, so it’s more important than ever to shop around to make sure you get the most for your money.
The cost of using your mobile phone abroad could also rise, as caps on roaming charges may not apply once Britain has left the EU, the same with the protections offered by European Health Insurance Card or the EU’s Flight Delay Compensation.
Savings & Pensions
Despite 2016 being a turbulent and political one, the year saw the best returns for pensions since 2009. Stock markets don’t like turbulence, and the markets indeed fell after the vote. Not only damaging those who have pensions, but putting off the younger generation who are trying to save for their retirement.
However, Pensions are linked to the performance for the FTSE so if this increases, so do pensions.
The critical issue here is for those who must decide whether they take their pension now or wait until the market increases to obtain more.
Savers have continually suffered from low-interest rates for several years. Namely because of the Bank of England base rate remaining so low – making it easier and cheaper to borrow money than save it.
But, if consumer prices increase, for example, on food, then the Bank of England will raise interest rates, and savers will welcome this. With Brits typically being bad savers because of little incentive, this could finally help those begin saving for their future if they incentivised by an increase in savings rates.
Whilst savers would be happy with an increase in interest rates, those with mortgages will not.
This may be worrying if you are one of the 63% of Brits that own their own home. But this could be good news for millennials who have been struggling to afford a house or flat.
In fact, according to the Halifax Price Index house prices only fell between only 0.1% between February and April 2018, so hardly a huge depression of house prices.
Fuel & Energy
A recent House of Lords report says that Britain receives 12% of its gas and 5% of electricity from the EU. The report concluded that Britain would face energy shortages because of this and prices will increase.
To many British households, energy suppliers are always increasing and freezing their prices, and it would be mistaken to label this impact because of the Brexit vote. Energy prices have risen whilst the UK is in the EU, so this represents little joy to those households whether the UK is in the EU or not.
The tip here would be to ensure that households switch energy suppliers to those offering the lowest prices. USwitch has a comprehensive list of who is the cheapest.
Sadly the same cannot be said for fuel prices, which have steadily increased since the Brexit vote and continue to rise. The AA says that petrol has been increased to an average of £8.25 a tank, more than a year ago, and with the weaker pound, are set to become more expensive.
Check the AA Fuel Prices Report regularly for the latest increases or decreases in fuel prices – it can be cheaper to fill up your tank depending on your location so that you can make savings.
The driving app Waze also notes the price of fuel in locations near you – from petrol stations to supermarkets, so you can avoid the more expensive fuel costs as much as you can.
To summarise – yes, Brexit will have an impact on your finances, but is not the doom and gloom story that you hear about in the news.
Our biggest recommendation before the UK leaves the EU is this:
If you do not have savings now, then to maximise your budget as much as you can without paying for unnecessities. By doing so, you’ll be in a stronger position to absorb any changes in your financial circumstances.
*With information around Brexit constantly changing, Peachy has attempted to explain and discuss these points with information at the time of the articles publication. The views and facts expressed in this article are subject to change.