What will Brexit mean for your personal finances?

The looming nationwide topic of Brexit is still – well into the start of 2020 – permeating many aspects of everyday life in the UK. With Britain has officially left the EU on the 31st of January, being given the rest of the year (until the 31st December 2020) as an adjustment period to figure out its next steps, many are still left contemplating how these coming changes – both known and unknown – might affect them personally in the coming months and years.

Are you wondering how Brexit and its associated effects on the UK will affect your finances? Read on for a few different aspects surrounding Brexit personal finance, Brexit and the economy in general (including the UK economy after Brexit), and the future for the UK throughout 2020 as the final touches in rescinding from the EU take place. ‘Brexit means Brexit’, but what does Brexit mean for you and your money?

Brexit and finance – The Pennies and Pounds

To start with, looking at the trajectory and value of the pound gives quite the indication of the Brexit finance highs and lows since the referendum results in 2016. In the months immediately after the vote, the pound hit the lowest point it had been at in 30 years. These sorts of reactionary dips have followed the political situation as it has developed.

Nowadays, however, there is still some work to be done, but the growth is looking promising. Closing out the year and forging a new path over the next decade, the pound started off strong in 2020, and topped $1.35 on the dollar at one point after the election, which was the highest it had been in 18 months. According to some reports it was also the highest it’s been in years against the Euro.

Despite which party you might have voted for in December, or what your political opinions are on Boris Johnson and his approach to Brexit and the EU, there is no denying that the clear cut answer to the general election has steadied the ship at least temporarily. In the short-term, this gives you a little less to worry about with regard to your personal finances. The potential of an oncoming storm over the next twelve months will stem from whether or not the government are able to secure stable deals with the EU that maintain investor support and keep them happy.

Brexit and the economy – Hard or Soft Brexit?

Part of the economy’s promise and stability at least starting out in 2020 comes from the fact that the government has seemed to come to some semblance of a deal, or stance on what’s to come in the future. However, as the government’s negotiations and finalisation of the Brexit process will come to a head in the next year, it’s not outside the realm of possibility that we could be in another worrisome state of uncertainty come Christmas time if they don’t come up with solutions to the different spinning plates. Let’s hope that the government doesn’t crack under pressure, as they’ll be walking on eggshells for the next 11 months throughout the negotiation period.

Hard/Soft-Boiled Breggsit – Here’s how a hard or soft stance in the coming months could affect the UK economy after Brexit:

  • Soft Brexit Finance – a lenient position on leaving, one that maintains the status quo as much as possible concerning trading and existing deals with other countries, would make the volatility of savings and investment a lot smoother, but it could also affect our trade prospects if still having to adhere to laws and regulations in place. Many on the side of leave think that withdrawing from the markets that the EU offers while still adhering to their regulation (in the way that countries such as Iceland and Norway do) would put us in an even weaker position than what we started with.
  • Hard Brexit Finance – A harder stance on Brexit, that many deem as a step into the unknown, would be a more difficult obstacle for people to overcome financially, as prices will fluctuate as they have done over the past few years until another satisfying balance is found. Again though, some politicians and voters think that after meandering through negotiations for quite some time now, this option would help to cut through some of the bureaucratic red tapes a little faster.

Brexit and the economy – A flip of the coin

The chancellor of the exchequer Sajid Javid was likened to The Lord of the Rings’ Gollum character by spectators on social media recently, as he held up the commemorative Brexit 50p coin in a fashion similar to how Tolkien’s creature proudly clasped the one ring to rule them all. The coin itself bears the slogan ‘Peace, prosperity and friendship with all nations’.

Some remain voters, still holding the position that leaving the EU will be similar to jumping ‘out of the frying pan and into the fire’, have even stated that they intend not to use the coin as legal tender and refuse it entirely, instead opting for two 20p pieces and one 10 pence piece. These sorts of day to day conflicts surrounding Brexit indicate that the public is still very much split on the issue after such a close referendum result in the summer of 2016. Still, nevertheless, the economy seems to be on an upward trajectory going into 2020, even if the fallout of the vote itself caused slumps in the past few years.

Brexit personal finance – How will Brexit affect your finances?

The main crux of the worry surrounding Brexit, at least from a financial perspective, seems to be the uncertainty going forward. Factors such as the UK potentially relinquishing its place in the single market, and the UK’s trade options after Brexit with countries such as the US and China, will have a direct and measurable effect on the products and services we buy in our day to day lives, as well as the opportunities afforded to us for additional savings and investments if wanting to better our personal financial portfolios.

As a consumer – a regular resident of the UK living day to day – perhaps one of the most measurable and noticeable differences to come throughout the coming months and years might be increased taxes and charges on imported goods from other countries, and countries within Europe. 

In terms of general job opportunity itself, it seems like employment prospects are steady and healthy in the face of uncertainty. The website Money.co.uk reported in the autumn of last year that unemployment rates were down to 4.1% in the UK, as opposed to 5% when the referendum initially came about. Evidently, whether the economy shrinks or grows in the coming years will be what affects job prospects. This is also entirely contextual, depending on the sort of career path you’re on and the sector that you’re working in – as some jobs may be more in demand than others.

Tip – Again, one smart thing that you could do here if concerned about your job’s security in the midst of Brexit would be to talk to your colleagues and/or manager about the situation, and what effects it might have in the future so that you can adequately prepare. A lot of large-scale companies that operate internationally will have forecasts and planning in place for Brexit.

The Brexit effect on finance – Will my savings be safe after Brexit?

Those worried about their own personal savings and stored-away investments can take a bit of a breather to begin with in 2020, as thanks to the year-long grace period that has been put in place post-January, you’ll have some more time before things like that start to change.

Tip – If you’re concerned about your savings/capital being affected in the wake of Brexit, one of the best things to do would be to contact your personal bank and ask them directly what the situation is. Rather than reading generalised information and developments, ask for specifics relevant to your financial situation. They should keep you in the loop directly of any changes you need to know about your accounts and money, and will keep you up to date on anything important far in advance.  

For additional advice and information, not just related to finances but also to general affecting changes caused by Brexit, the government website also provides resources and advice on what to do and who to contact if you need more help.

Brexit finance – in the every day

Wondering ‘how will Brexit affect your finances’? Day-to-day spending on the regular necessities such as your weekly shop, and also on monthly outgoings such as energy bills etc., could be affected by Brexit, and so it’s also vital that you account for these when budgeting for Brexit. Again, a study done by Money.co.uk found that in the 12 months following the referendum result, the prices of items such as cereals, butter, potatoes, bacon and chicken had all raised in price.

While these sorts of purchases might seem trivial in the grand scheme of things, and not relevant to the overall Brexit effect on finance, on a singular level they certainly will add up over time and eat away at a substantial chunk of your earnings, so don’t dismiss or overlook them. As a general rule of thumb, if a certain item in your weekly shop has risen to an uncomfortable price, don’t be afraid to shop around and get your groceries peace-meal rather than in one bulk outing.

Brexit and the economy When will the results of Brexit finally start to come into effect?

The Conservative landslide election result late last year, which saw the incumbent government assume a resounding 364 seats, has in some ways solidified the UK’s stance on leaving the European Union – and perhaps general fatigue on the matter being debated non-stop over the past couple of years has turned the zeitgeist in the country in favour of ‘getting on with it’ (or even ‘getting it over with’). The results of the UK leaving the EU on the 31st January will mostly not be felt immediately, and instead will unfold over the course of 2020.

UK economy after Brexit – The Housing market

Again, for those concerned about their investment prospects in the midst of Brexit, there are reasons to be positive. The housing market, for example, has experienced massive short-term growth of around 2.3% – a reactionary spike that the Times dubbed the ‘Boris Boost’ this January. Tenants and homebuyers looking to move have been reluctant to make any movement while Brexit and finance developments have been ongoing, but it now seems that they are no longer willing to wait for a better deal to come along. It goes without saying that this is good news for existing homeowners, as if they have their savings/capital stored away in a property investment then they won’t have to worry about it drastically losing value.

For buyers looking to get a rental property in some of the best areas going forward, Northern cities such as Liverpool and Manchester seem to be the best for growing prices and yield percentages. Demand is also on the rise, as many look away from the steep prices of the capital in favour of a better standard of living matched with cost. Businesses also continue to ‘north-shore’, moving some or all of their employees up-north for very much the same economic reasons. Johnson’s Conservative government has pledged to continue schemes and funding throughout spots in the north, helping to further balance the divide of power from the southern cities.

Brexit and finance – What are the experts saying? 

It feels like Brexit hasn’t left the headlines since the referendum result back in 2016, and some websites and publications even have a full section dedicated to Brexit. While there are plenty of pundits out there spouting biases and rhetoric based on their own personal interests and gains (or maybe simply just to be heard above the rest for a controversial opinion), there are a ton of knowledgeable and thought-out opinion leaders that you might look towards to shed some light on this confusing time.

A temporary sigh of relief for savers – Martin Lewis from MoneySavingExpert explained to his readers that factors such as mortgages and travel rights have been moved onto this new transitional ruleset for the sake of continuity and that the notable date and fanfare on the 31st is unimportant – what matters is how these changes will develop.

Remember – While there will undoubtedly be general rules and changes introduced by the UK’s European independence in the coming years that will affect us as an overall population, it’s important to do your research into what changes might affect you directly.

Brexit and finance – How will Brexit affect my benefits?

Currently, benefit payments and the system surrounding them is unchanged, and will likely remain so for the entire transition period after January 31st. Ultimately, changes to these systems will depend on the economy, and whether it thrives in the post-Brexit era or stumbles in amongst such uncertainty.

Finance after Brexit – in summary

Brexit is well underway at this point, so if you’re concerned about the future, and are unsure about what sorts of steps that you should be taking, here are some next steps to think about throughout 2020 and into the future of the UK without the European Union.

Be generally more attuned to your finance after Brexit

Ultimately, regardless of the UK economy after Brexit, and whether the long term effects over the coming months and years are actually beneficial or detrimental to the country’s overall economy, it certainly won’t hurt going forward in the new decade for you to be more financially savvy, aware, and efficient. 

Spend a lot of time commuting to work, or just generally attached to your smartphone when you’ve got a few minutes each day? Perhaps you could make a small change by leveraging some smart savings/investment mobile apps, such as Cleo or Credit Karma.

Got an investment portfolio that you want to maintain and grow over the next decade? Simply want to start saving more money away and get into some better spending habits, perhaps for working towards your next big purchase, such as a deposit on a house etc.? Play closer attention to what’s going in and out of your bank account regularly, and try to trim some of the unnecessary costs and outgoings in the new year.

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