How will Brexit affect your bills?

With the UK’s EU leaving date looming ever closer, and with so much still up in the air, it’s likely you’ve been wondering exactly how Brexit will affect your finances.

Pound coins

Co-authored by Emma Lunn and Mehdi Punjwani

 

Whether you have questions about insurance, house prices, travel, energy bills or interest rates, we’ve put together a guide on what's happening so far, and we’ll update it regularly with new information as we get it, so you can stay up to date with Brexit and your finances.

 

How will Brexit affect travel insurance?

How will Brexit affect travel money?

How will Brexit affect car and motorbike insurance?

How will Brexit affect van insurance?

How will Brexit affect breakdown cover?

How will Brexit affect pet travel?

How will Brexit affect house prices?

How will Brexit affect interest rates?

How will Brexit affect mobile phone tariffs?

How will Brexit affect energy prices?

How will Brexit affect your broadband?

 

How will Brexit affect travel insurance?

Until the UK actually leaves the European Union it’s hard to know exactly what the knock-on effects will be for travellers. However, if you’re planning to travel abroad after Brexit, there are certain points to be aware of.

The Safer Tourism Foundation believes that trains, planes, ferries, and cruises should be unaffected by Brexit. This means you should still be able to travel as normal from the UK to anywhere else in the world – though there may be changes in passport validity requirements when it comes to visiting countries in the Schengen area.

The Schengen area refers to the 26 European states that have officially abolished passport and border control along their mutual borders. The countries are as follows: Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and Switzerland.

Additionally, as a safety measure, there is an emergency EU plan to keep the Eurostar tunnel running for three months after we leave the EU – and the deadline has been extended to 31 January.

However, it’s important to consider whether your travel insurance policy will cover you if there are disruptions to travel as a result of Brexit.

Some travel insurance policies may cover travel disruption, cancelled accommodation, and rescinded excursions in certain cases, but Brexit related delays are unlikely to feature on the list of specific reasons.

However, some policies will have more open wording around the cause of the delay or disruption, which means you may be able to claim some compensation. This will largely depend on the policy you have and the level of cover it provides, but it’s always worth talking to your insurer to check.

It’s also likely the cost of European travel insurance will rise on the back of Brexit – but it may not be immediate. It may depend on agreements made, if any, concerning reciprocal healthcare, as this is one of the major potential costs you might face when travelling abroad.

As for the European Health Insurance Card (EHIC), once we leave the EU, the EHIC will no longer be valid for UK citizens. But while it has been useful to have when travelling in Europe, it’s always been recommended that you also take out a travel insurance policy to ensure you’re fully covered, and this will remain the case.

For more on how Brexit might influence your travels, read our guide to Brexit and travel insurance.

How will Brexit affect travel money?

While MPs thrash out trade deals, the Irish backstop and free movement, many people will be more concerned about what Brexit means for their summer holiday. In short, a weak pound against the Euro means more expensive holidays in Europe. 

The pound has been on a rollercoaster ride in the run up to Brexit and is a long way from where it was just before the referendum in June 2016. Back then, £1 would buy you €1.27, compared to about €1.16 now. It’s a similar story against other major currencies. In May 2016, £1 would have bought you about $1.46, compared to roughly $1.32 now.

In practical terms, this means that if you wanted to take €500 spending money with you for your trip, it would have cost about £393 before the referendum, but now it will set you back roughly £431. If you’re heading to the US, $500 would have cost about £342 in May 2016, compared to about £379 now.

Experts predict the value of the pound will continue to fluctuate until we have a clearer picture about what’s happening. These fluctuations make it virtually impossible to time the market and buy your travel money at the “right” time.

If you buy your currency now and the pound rallies, you’ll have missed out on better rates. On the flip side if you buy now and sterling weakens, you’ll be glad you acted sooner rather than later.

If you’re worried that the pound will fall further between booking your holiday and the date you travel, you can lock in your exchange rate with a currency card such as Revolut, or a multi-currency bank account like Transferwise. If you wanted to hedge your bets, you could exchange half of your money now and the rest just before you go.

How will Brexit affect car and motorbike insurance?

At the moment, UK drivers are covered to drive all over the European Economic Area (EEA), as well as Andorra, Serbia, and Switzerland, as all UK vehicle insurance provides the minimum third party cover to drive in other EU countries.

However, the impending uncertainty surrounding Brexit means things could soon change. In the event of a no-deal Brexit, UK drivers may need a green card in order to be allowed to drive in the EU.

A green card is an international certificate of insurance, issued by UK insurers, guaranteeing that you have the necessary minimum car insurance cover for driving in the country you’re going to.

An agreement between the UK and European insurance authorities to waive the need for a green card was struck in May 2018, but it has not been passed into law by the European Commission, and unless Brexit it delayed, it won’t be approved in time.

The price we pay for car insurance may also be affected after Brexit – when the UK leaves the EU it won’t be bound by the EU’s regulations on insurance, which prevents factors such as gender influencing the price of your policy.

You can read more about Brexit and car insurance in our article.

How will Brexit affect van insurance?

Van drivers will also be required to carry a green card when driving in Europe if there’s a no-deal Brexit.

But if you use your van for business, you may also find that Brexit causes longer queuing times to enter and exit the country.

This could affect the validity of your business van insurance policy, depending on how long you’re delayed for – so it may be worth talking to your insurer to find out if there’s anything you should be aware of.

How will Brexit affect breakdown cover?

When it comes to breakdown cover, it’s unclear as to how this will be affected. Providing you’re carrying your green card when driving in Europe, and you have a European breakdown cover policy in place, it currently looks likely that nothing will change.

How will Brexit affect pet travel?

If you’re planning to head to Europe with your pets after 31 January 2020, the new Brexit deadline, you should keep in mind that pet passports issued in the UK won’t be valid in the EU in the event of a no-deal Brexit.

As a result, you’ll need to do the following in order to take your dog, cat, or ferret abroad:

  • Your pet must be microchipped
  • Your pet must also be vaccinated against rabies or be given a booster shot – your vet will tell you what your pet needs
  • At least 30 days after being vaccinated, your vet will need to take a blood sample and send it to an EU-approved laboratory. They’ll check to see if the vaccination was successful
  • If it was successful, you’ll have to wait three months from the blood sample date to be able to travel
  • At least 10 days before you travel, you’ll need to take your pet to an official veterinarian (OV) to get a health certificate. You’ll need to take your pet’s vaccination history with you

The health certificate will let you:

  • Enter the EU within 10 days of getting the certificate
  • Travel in the EU for four months
  • Return to the UK within four months of getting the certificate

So long as you keep your rabies vaccinations and boosters up to date, you’ll only need to have your pet’s blood tested for the first time you travel into the EU.

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

How will Brexit affect house prices?

The property market has stagnated since the referendum in June 2016. However, that doesn’t mean house prices have fallen – they have just risen at a slower pace.

According to the Office for National Statistics (ONS), UK house prices were up 8.17% in the year ending June 2016. A year later they’d only risen 4.13% and in the year ending June 2018, the figure stood at 3.03%.

It’s tricky to accurately predict what will happen next – but either rampant house price inflation or a house price crash are very unlikely. The fundamentals that drive house price growth (limited supply and low interest rates) remain unchanged for now.

Whether house prices matter largely depends on your personal circumstances. Homeowners generally like to see the value of their property increase – it makes them feel more confident about their finances and it makes remortgaging easier (and cheaper).

Potential first-time buyers, on the other hand, will be pleased house price growth is slowing as it will up their chances of saving a sufficient deposit, which is one of the biggest barriers to getting on the housing ladder.

The Royal Institute of Chartered Surveyors (RICS) reckons Brexit is causing a decline in activity across the UK housing market, with new buyer enquiries, agreed sales and instructions all falling. Would-be sellers and potential buyers are sitting tight and not making a decision, waiting to see how the UK’s exit from the EU plays out. RICS says prolonged Brexit uncertainty will mean this situation continues.

You can read more about this in our guide to Brexit and house prices

Colourful terraced housing.

How will Brexit affect interest rates?

The Bank of England base rate (or “bank rate”) is set by the bank’s monetary policy committee (MPC) which meets each month to decide if the rate should rise, fall or stay the same.

There are nine people on the committee and, to date, two of them have suggested the base rate could be cut in the event of no-deal Brexit, and two others have predicted that no deal would result in a rate rise. The bank’s official position is that the MPC response to Brexit could be in either direction.

So, in a nutshell, this means we don’t know how Brexit, and any deal, will affect interest rates.

What we do know is how interest rate changes affect mortgages. Higher interest rates would mean those on variable rate mortgages, such as trackers, would face higher repayments.

Borrowers with fixed rate mortgages won’t be affected until the end of their fixed term, but depending on what rate they are currently on, they may then find they have to move to a higher rate deal.

It’s less clear cut about whether interest rates on loans and credit cards could be affected by base rate changes. Historical trends actually suggest borrowers with unsecured debts don’t see the costs of their debts change much, whether interest rates go up or down.

In theory, a rise in interest rates would mean better returns for savers, while a fall in interest rates could mean even stingier rates than we’re seeing at the moment. But in practice, banks are quick to pass on increases in interest rates to mortgage customers, and not so quick to pass on the increase to their savers.

In other words, it will take several and significant rate rises to give savers cause for celebration.

You can use our base rate calculator to work out how a change in the base rate could affect you, for both mortgage payments and savings. And read our guide to Brexit and interest rates for a more detailed view.

How will Brexit affect mobile phone tariffs?

The big Brexit issue for mobile phone users isn’t everyday tariffs, but roaming costs. Roaming is when you use your mobile phone abroad. It used to be very expensive to use your phone in Europe, especially for data, with holidaymakers routinely returning to sky-high bills.

But that all changed in June 2017 when the EU scrapped additional charges for roaming when you travel to another EU country. “Roam Like At Home” means travellers can, within reason, use the minutes, texts and data included on their mobile phone tariff at no extra cost when travelling in the EU. The same stands for mobile users from other EU countries visiting the UK.

The big question is whether roaming charges will return after Brexit when networks no longer have to stick to this rule. So far, out of the four main UK networks, only Three has confirmed that its customers will still be able to use data roaming in Europe at no extra cost after Brexit.

The other major UK operators – EE, O2, and Vodafone – have all said they have no plans to reintroduce roaming charges but they’ve stopped short of offering a firm commitment.

Three is a good bet for travellers anyway. Currently, it offers roaming at no extra charge in 71 locations, not just Europe. Those further afield include the US, Australia, Hong Kong and large parts of Central and Southern America.

If there's no deal, the government has said it will legislate to introduce a £45 cap on roaming charges, with networks obliged to send customers a warning when 80% of that had been reached.

How will Brexit affect energy prices?

Household energy bills could change when the UK leaves the EU. This is due to three main possible factors:

  • A reduction in EU investment and increased transportation costs
  • Leaving the EU Emission Trading System (EU ETS)
  • Not having a replacement body for European Atomic Energy Community (Euratom)

One of the key issues is the UK’s increasing reliance on interconnectors. These are pipes or wires that carry electricity or gas between countries. The UK has interconnectors with France, Belgium, The Netherlands and Ireland, while Northern Ireland has interconnectors with the Republic of Ireland and Scotland. Interconnectors with Norway and Denmark are in the process of being built.

If the UK leaves the EU Internal Energy Market, trade by these interconnectors could be less efficient and more expensive. For the UK to continue to benefit from this set-up we’d need new trading agreements to govern cross-border electricity flows.

Britain’s exit from the EU could also lead to a change in the VAT rate charged on household gas and electricity. In the UK, household gas and electricity is charged at 5% and under EU rules, it cannot be lowered.

By leaving the EU, it’s possible VAT could go down, but it’s not clear whether that would actually happen and it doesn’t necessarily mean we would pay less for our energy bills.

You can read more about this in our guide to Brexit and energy prices.

How will Brexit affect your broadband?

Although no one knows for sure, it’s possible that Brexit could affect the advancement of network and connectivity technology such as broadband and 5G.

The Confederation of British Industry released a report in February 2019, warning that Brexit is “sucking the oxygen” out of schemes such as the roll-out of full fibre broadband and 5G mobile networks.

The three main risks associated with Brexit and Britain’s communications are:

  • Lack of investment: Brexit could result in reduced investment in Britain, which could mean less funding is directed to broadband and network development
  • Access to equipment: there may also be consequences relating to Britain leaving the single market, as the equipment needed to maintain a full fibre broadband network could be much harder to acquire
  • Availability of skilled workers: it’s possible that leaving the EU could lead to a reduction in skilled engineers working in Britain. 

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