Now that all of the screaming and hollering about Brexit has quieted down somewhat… well actually it hasn’t. There’s still quite a lot of shouting going on, for the vote on 23 June was not an end but rather a beginning of a new era of uncertainty (and that’s putting it mildly). The plummeting pound was but one immediate result of the referendum. Like it or not however, we’re all in the same boat, and whether you voted Leave or Remain, you’re probably still wondering exactly how Brexit is going to affect various areas of your life, perhaps your financial well being in particular. Although nobody can say for certain, here are some projections about possible effects on your bottom line.
While little is cast in stone at this point, the old saying that the only thing that is constant is change seems to apply. Financial Times, a US-based observer of all things financial, predicts mostly increases in what Britons will pay as a result of an actual Brexit move, but holds out hope for some decreases, as well. Here are a few examples.
Likely rising: Telecom-related costs – While telecoms have been forced by regulators to respond to UK membership in the EU by eliminating roaming charges for mobile phone use in EU countries, don’t expect the companies to be bound to those regulations should Brexit actually occur. The requirement for consistency in pricing that is part of EU membership would likely no longer apply, allowing telecoms to implement roaming charges for mobile phone use in the same manner they apply to any other “foreign” (as in non-member) state. Consumers might also lose access to or pay higher prices for telecom-related services such as Netflix while traveling in EU countries.
Almost certainly rising: Petrol prices – The freeze in fuel duty that Brits have enjoyed for the last six years will likely end, just as artificially-depressed oil prices have begun to rise. Brits will almost certainly see a significant rise at the pumps if Brexit actually happens.
Retail prices – A weakened pound will result in increases in the prices of imported goods.
Holiday bookings – Foreign travel, including travel to EU countries, will also be more costly due to the pound’s decreasing exchange rate with other currencies.
Likely decreasing, but with a caveat – Electric bills will likely decrease, so long as oil and gas prices remain depressed. The caveat is that those depressed oil and gas prices also result in significant job losses, and a lower electric bill doesn’t mean much when there’s no money coming into your current account every month. Plus, there is the uncertainty about what changes will be made to the fuel duty, which will affect consumers’ energy costs in the home as well as the car.
There are certainly enough variables facing Brits to give them pause, but life as we know it will more than likely proceed with less to be panicked about than some analysts’ fears would suggest. According to an article on the BBC Business website, the average Briton’s savings pot will still be safe, at least that part of it that is in banks, building societies, or credit unions. Interest rates will probably either remain unchanged or be lowered a bit to encourage borrowing, even as a further reduction will have an inhibitory effect upon saving. In a recording on its helpline, HM Revenue and Customs insists that “Everything is continuing as normal. No laws have changed.” And yes, your ATM will still have money, as no panicked rush for cash is expected or likely.
In the wake of the Leave vote victory, the Bank of England issued a major report in early July 2016 warning that the Brexit-related risks it had identified are emerging. Accordingly the Bank has eased up somewhat on special capital requirements for banks, freeing up a potential £150 billion for lending. This is an attempt to proactively boost a sluggish post-Brexit economy. Eight major banks said they were on board, and Bank of England governor Mark Carney said that this means that three quarters of UK banks will immediately have greater flexibility to supply credit to UK households and businesses. And that could be very good news for millions.
But if you think that all of this new “flexibility” means that just anyone and everyone will easily qualify for credit or for the lowest rates on a loan, guess again. There are still restrictions in place to protect not only the lender or creditor but the consumer as well, with the result that people with questionable credit histories may still find themselves at a loss when they need cash, particularly if they turn to traditional sources such as banks. Brexit has not and most likely will not change that. Does this mean that people with poor credit are out of luck? Not at all.
The modern personal finances industry is highly competitive, and with a little research even the most credit-challenged individual can find a suitable lender. That was true before the referendum and remains true now. The key word here is “research”, which involves weeding out useful information from marketing fluff.
If you have poor credit you almost certainly won’t be able to get the same kind of rates and terms as someone with a spotless report, but you can still get the best deal for you if you shop carefully. And if you handle that loan responsibly, even a high-interest product designed for people with poor credit can help you improve your credit rating and get you back on track financially.
No one can really say what’s going to happen in the months and years ahead. The best we can do is to make the decision to take charge of our own financial well being – which is something we all can do regardless of what voters have done and what the Parliament decides to do with the results.