Brexit: making sense of the stories
Brexit: making sense of the stories
When Britain took the historic decision to leave the European Union, we reviewed the potential financial implications of Brexit.
Now that the dust is beginning to settle, we’ve reviewed what the experts are saying about our post-Brexit finances.
As soon as the referendum decision became clear, the value of the pound crashed. One of the immediate consequences of this is that your holiday to Europe could be more expensive, as the pound in your pocket will get you fewer euros.
So, if you’re thinking of going on holiday soon, should you put off swapping currencies?
The Daily Mail recommends not. While the value of the pound may rebound, it might fall still further, making things even more expensive. The paper also recommends taking a credit card with you when you travel. There are a number of cards which waive fees when you use them abroad.
Despite predictions that petrol prices would go up, Manchester Evening News reported that petrol prices have dropped in August. This is due to a fall in wholesale prices of petrol by 6%. Asda has announced a national cap on petrol at 105.7ppl on unleaded and 106.7ppl on diesel, and Tesco have responded by dropping their prices by 2p.
As anyone with a savings account will know, interest rates have been low for a really long time. The Brexit vote hasn’t changed that. In fact, it may mean that the Bank of England keeps the base rate – the interest rate which your bank uses as a starting point for working out the interest rates it offers you – lower for longer, according to the Guardian.
This means that it will be even more important to shop around to find a good savings account which will give you a decent interest rate. Lots of savings accounts offer good introductory rates which will drop off after a time, so keep an eye on it and move your money to a new account as soon as the introductory rate ends.
Mortgages and debt
While the prospect of a Bank of England rate cut might not be great for your savings, it could help when it comes to dealing with any personal debts or mortgage repayments, as these are set in line with the base rate as well.
The Express reports that there are some incredible deals currently on mortgages because of the low base rate. Because of this, it may be worth considering a fixed rate mortgage to ‘lock in’ one of these great deals.
The low rates could also be great for people with credit card debts, as a lower base rate should feed through into your interest repayments and reduce the overall cost of your credit. This means that now could be an ideal opportunity to try to work off some of your outstanding balance.
The Independent has reported that food prices are likely to go up in the short term, because 40% of the food we consume comes from overseas. Helen Dickinson, chief executive of the British Retail Consortium (BRC) stated that this will depend on the future value of the pound, commodity prices and any impact on input costs.
We still don’t know what is going to happen to our personal finances in the long term as a result of the Brexit vote. The reality is that we won’t be leaving the EU for another two years, and larger changes will occur when we negotiate the terms of our exit. All the experts are giving their best guess, but no one can know for sure.
The best advice we can give is to make sure you know your own financial situation by checking your current accounts and credit report regularly and to keep an eye on the news to see how things change.