How will Brexit affect your finances?

Want to know what impact leaving the EU will have on your wallet? Here we give you the lowdown

Pound coins

Want to know what impact leaving the EU will have on your wallet? Here we give you the lowdown While the Coronavirus crisis may have taken centre stage for most of 2020, lengthy Brexit negotiations were taking place behind the scenes.

After months of thrashing out the final deals and details during the transition period – which began in February 2020, and ended on December 31 – the UK has now finally left the European Union (EU).

Admittedly, there is still much up in the air, and a lot of questions that remain unanswered.

But as we adjust to the new ‘normal,’ it’s important to try and get an understanding of what exiting the EU will mean for our personal finances.

We’ll update this regularly with new information as we get it, so you can stay up-to-date on all the things you need to know.

Interest rates

House prices

Travel

Transport

EHIC and travel insurance

Travel money

Driving in Europe

Car insurance

Breakdown cover

Pet travel

Mobile phone tariffs

Energy prices

Broadband

For more information

Interest rates

In March last year, the Bank of England slashed the base rate from 0.75% to 0.1% – due to the pandemic.

While there’s no crystal ball to help us see what will happen this year, there’s speculation that rates could stay at 0.1% through 2021 and into 2022 – and potentially for even longer.

Moreover, if the economic outlook continues to worsen, there’s a possibility we could even see negative interest rates. This would involve the Bank taking rates below zero.

On the upside, this could mean the continuation of cheaper mortgages for borrowers. But it could also mean that rock-bottom rates for savers sink even lower – or that banks could start charging savers to hold money, meaning savers essentially have to ‘pay’ for the privilege of having their money on deposit.

While this may make for pretty gloomy reading, we also need to bear in mind that when good news finally returns, things could reverse rapidly, and interest rates could go up.

As and when the base rate does change, you can use our base rate calculator tool to work out what that might mean for your mortgage and savings.

Crucially, as none of us can predict what will happen, the best approach is to have a decent emergency fund – and do all we can to try to stay in control of our finances as much as possible.

House prices

When it comes to property prices, it’s not just Brexit, but also Covid, which will have a big impact.

The housing market was forced to shut down for a period in 2020 due to Coronavirus and the first lockdown, but since it reopened in May, a combination of pent-up demand – and the stamp duty holiday – have sent prices rocketing sky-high.

Right now, it’s hard to forecast what long-term effects Covid will have on house prices – let alone when Brexit is added to the mix.

But with the end of the stamp duty holiday looming on March 31, we could see transactions get more concentrated for a few months now, before dropping off when it comes to an end. At that point, we may find that people can afford to pay less, and this could put downward pressure on prices.

At the same time, the end of the furlough scheme – also in March – could result in higher unemployment, and this could make banks less willing to lend.

Equally, the prospect of a vaccine – and the potential for returning to some form of ‘normal’ by Easter – could mean that any downturn in house prices is not as severe as it might otherwise have been.

Travel

During the transition period, travellers were able to use UK passports when travelling anywhere in the European Union.
Now that period has ended, the initial expectation was that holidaymakers would need to apply for a visa waiver – known as an ETIAS (Europe Travel Information and Authorisation System) – when travelling to most European countries.

However, more recent announcements suggest the introduction of this scheme is being delayed – potentially until 2023.

As a result, you may be able to continue going on holiday to the continent for a little while longer without having to fill out this paperwork – and without having to pay a fee for the paperwork.

Read more here.

Transport

At present, it looks as though trains, planes, ferries and cruises should be unaffected by Brexit.

This means, for now at least, you should still be able to travel as normal from the UK to anywhere in the world as you did before.

EHIC and travel insurance

In the past, if you had a European Health Insurance Card (EHIC), this entitled you to healthcare at state-run hospitals – on the same terms as nationals of those countries, and at the same cost.

While this card has never been a substitute for comprehensive travel insurance, it has been a very helpful add-on.

But going forward, the future of the EHIC looks less certain. (The exception to this is UK state pensioners living in the EU prior to the end of 2020, and UK students who commenced a course in the EU before the of 2020. For these two groups, the EHIC will still be valid.)

For holidaymakers and anyone else who can no longer get access to reciprocal healthcare, travel insurance – including cover for medical costs – is a must. You should purchase this cover before going on holiday. And, if you have a pre-existing medical condition, you must be extra careful to ensure you have the right cover in place.

At the same time, with the Coronavirus crisis still causing disruption to travel plans, you should also check the T&Cs of your cover to find exactly what you are – and are not – covered for.

Read more about Brexit and travel insurance here.

Travel money

Given that a Brexit deal was reached, this should mean sterling gets stronger – especially if this is combined with an effective vaccine. If we do see the pound rally, this will be good news for those planning holidays, as costs will be cheaper.

Driving in Europe

During the transition period, drivers could go on using their UK driving licences when motoring on the Continent.

However, following Brexit, you may need to take out an international driving permit on top of your normal DVLA licence. You can get these from the Post Office at a cost of £5.50.

Car insurance

Until now, UK drivers have been covered to drive in Europe, as all UK vehicle insurance provides the minimum third party cover to drive in other EU countries.

Following Brexit, when driving in the EU, you will need a ‘green card’. This document is an international certificate of insurance which proves your policy offers the ‘minimum cover’ (third-party cover) for the country in which you’re driving. You will need to speak to your insurer to see if they can issue you with one of these cards.

If you are planning on taking your car overseas this year, it’s worth being prepared, as these documents could take a while to process. Note that you may also need an old-school GB sticker for your car.

At the same time, we could find the price we pay for our car cover may be affected by Brexit.

Now that the UK  has left the EU, it is now longer bound by the EU’s regulations on insurance which prevent factors – such as gender – influencing the price of your policy.

Read more about Brexit and car insurance here.

Breakdown cover

As things stand, it doesn’t look as though anything will change in terms of having a European breakdown policy in place – provided you’re carrying your green card when driving in Europe.

But to be on the safe side, it may be worth speaking to your breakdown insurer ahead of any trips you are planning to the Continent with your car.

Pet travel

Until now, if you wanted to travel to an EU country with your cat, dog (or ferret), you were able to do so as long as the animal had a valid EU pet passport. This was permitted under the EU Pet Travel Scheme (PETS).

You could get a passport provided the pet was microchipped and had received a rabies vaccination.

However, going forward, the rules will be different, because it looks as though we will no longer be part of the PETS scheme.

We are yet to find out what the new rules will be, but there could be a lot more red tape involved in taking your four-legged friend overseas. As well as having your pet microchipped and vaccinated against rabies – or given a booster shot – it looks as though your pet may be required to give a blood sample to prove the vaccination was successful. This will then entitle your pet to a ‘health certificate.’

For now, the best approach is to seek advice from your vet at least four months prior to the date you plan to travel. For more information, head here.

In terms of the cost of pet cover, it’s likely that providers will still offer policies to cover your pets when you travel – though Brexit may result in higher premiums.

Mobile phone tariffs

Since June 2017, when the EU’s ‘Roam Like At Home’ rules were introduced – and all additional charges for roaming were scrapped – you have been able to make calls and send messages from the EU, safe in the knowledge you would face the same rates as you would do at home.

But all that could be about to change following Brexit, as there is no longer a requirement on mobile phone providers to offer free roaming.

While a number have said they have no plans to bring back roaming fees, there are no guarantees.

With this in mind, before heading on holiday, it may be worth contacting your mobile phone company to check about any roaming charges for using your phone while in Europe. This could help avoid any nasty surprises once you return home.

Energy prices

Uncertainties around trading and the longer-term supply of gas and electricity following Brexit could mean higher energy prices.

Read more about how the UK leaving the EU could affect your energy bills here.

As an energy customer, there is very little you can do, but sit tight and see what happens. If prices do rise, you may be able to make savings by switching to a cheaper tariff.

Broadband

As with so many areas of your finances, it’s hard to say exactly what effect Brexit will have on broadband.

There is speculation that it could affect the advancement of schemes such as the roll-out of full fibre broadband and 5G mobile networks.

Some of the potential risks associated with Brexit and broadband are: lack of investment, reduced access to the equipment needed to maintain a full fibre network, and a potential reduction in skilled engineers working in Britain.

As the impact of Brexit slowly unfolds, all this remains to be seen. In the meantime, the best way to take control is by ensuring you’re on the best value broadband deal for your needs.

For more information

For more help and advice on preparing for life post Brexit, check out the Government’s Check, Change, Go campaign.

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