Brexit officials have examined various scenarios under which the UK’s departure from the European Union might unfold. Though some proposals have gained support, the departure date draws near, without a formal agreement in place.
Prime Minister Boris Johnson appears committed to the established 31 October divorce date, whether or not terms are reached for the departure. Parliament, on the other hand, has already passed legislation that could delay Brexit until next year. With so many forces struggling to reach consensus, a no-deal Brexit remains a distinct possibility. What can you do to fortify your finances for a no-deal departure?
What Does No-Deal Mean for the UK?
Working out the details of the Brexit transition has always been a tall order, but supporters of the historic departure believed involved parties could roll up their sleeves and get the job done. Multiple extensions have plagued the process, ostensibly affording more time for negotiators to find common ground. With the departure date set for 31 October, a no-deal scenario would see the UK leaving the European Union without formal divorce stipulations in place, governing the transition.
The move would result in the UK immediately leaving the single market and customs union – initiatives designed to facilitate trade between EU members, by striking checks and tariffs. At the same time, the UK would exit EU law enforcement bodies European Court of Justice and Europol, as well as dropping out of dozens of EU bodies that oversee diverse aspects of the economy.
How Should You Prepare?
Hardcore Brexit opposition believes a no-deal departure is a disaster waiting to happen. Many proponents of leaving the EU, on the other hand, acknowledge the potential for hiccups during the transition, but believe the particulars can be ironed out without difficulty.
With individual Brexit concerns spanning worries from cost of living increases to border law changes, many UK residents want Brexit behind them. Whilst short-term online loans can help British workers stretch their earnings, in a pinch, settling Brexit would reduce financial uncertainty in many UK households. Experts point to the following concerns, managing personal finances ahead of Brexit.
- Savings – Personal savings provide a financial buffer against unexpected spending and cost of living increases. Even without a Brexit deal, The Department for Exiting the EU assures UK savers that steps have been taken to protect the legal and regulatory regime for financial services. One such provision secured between the UK government and EU counterparts ensures financial service providers from the EU will be allowed to continue doing business in the UK for at least three years, following the Brexit date. While building financial reserves is a good idea, with or without Brexit, bank officials also advise keeping some of your money in easy access or short notice accounts, providing flexible access to your cash.
- Pensions – British expats residing in the EU benefit from having their state pensions uprated in line with inflation. Expats living in other parts of the world do not enjoy the same benefit. Anticipating Brexit, the British Government has verified it plans to continue uprating state pensions for EU residents at least until 2023. Moves have also been made to protect private pensions and other financial services. The Association of British Insurers, for instance, contends the industry has done everything possible to minimise disruptions resulting from Brexit. According to the government, UK residents with pensions from EU firms should not be impacted by Brexit. In the meantime, active investors concerned about Brexit are advised to mitigate risk with safe investments, until the matter is settled.
- Mortgages – Mortgage interest rates are at historic lows, so remortgaging to a fixed rate is appealing to some owners, as Brexit nears. The move stabilises house payments for years to come, adding a measure of security to the otherwise uncertain environment spawned by Brexit. On the other hand, the Bank of England isn’t likely to raise rates in the wake of Brexit, so cheap mortgages may be available for the foreseeable future. With uncertainty afoot many owners are nonetheless opting for the security of fixed options, rather than taking their chances playing the market.
Brexit is out of your hands, yet you naturally want to protect your financial interests. The fact is, a no-deal Brexit is a very real possibility, and there isn’t much you can do to prepare for the departure. Aside from limiting investment risk in the short term and keeping cash available for unexpected Brexit hiccups, waiting with other anxious Britons is your only move.