As the prospects for a no-deal Brexit appear unavoidable, citizens’ financial futures are cloudy, at best. Despite many moths of ongoing negotiations, and a new Prime Minister now charged with moving forward an agreeable departure, uncertainty remains palpable among rank and file UK consumers.
Though the verdict is still out, one recent survey indicates more than one-third of the adult population is certain their finances will get worse following the Brexit departure.
Poll Data Shows Many See Brexit Glass Half Empty
Recent polling data, surveying both individuals that supported departure from the EU and voters who did not back the referendum, found more than a third of respondents believe their finances will take a turn for the worse after Brexit. The hefty share of the population fearing their finances are going to take a hit from Brexit represents 17 million people. Among their worries, many consumers believe
- the cost of food will rise,
- the value of the pound will go down,
- energy costs will rise as a result of Brexit.
Although loans are currently made available for working Britons, providing short-term financial relief until payday, worried consumers also fear Brexit may
- drive the cost of borrowing higher,
- make UK housing less affordable,
- result in lower earnings at work.
The research was conducted by YouGov on behalf of mutual insurer Royal London.
Could the Opposite Hold True?
A distinct possibility exists Brexit will result in some negative financial outcomes. The uncertainty still clouding potential Brexit scenarios only complicates things for UK consumers who remain in the dark about their financial futures. Although many hold negative views about potential post-Brexit upheaval, another school of thought paints a rosier picture.
It is thought about one in ten Britons believe their finances will improve once the Brexit transition has been settled. Their views appear based upon the assumption that rather than falling, the value of the pound will actually go up. And that instead of experiencing higher prices at the supermarket, food costs may go down, following the break from the EU.
Reports showing an economic slowdown and cooled growth forecasts about the future of the UK economy add to the swirling stew of mixed signals British voters have encountered since their vote to leave the EU. Ambiguity about the nature of the transition and potential fallout from a no-deal Brexit have tied Britons’ hands, preventing them from taking steps to reinforce their finances, leading up to the economic milestone.
Unsure how to set the stage for healthy post-Brexit finances, many Britons have already taken common sense measures to hedge against negative Brexit impacts. Families are putting major purchases on hold, including forgoing family holidays, delaying new car purchases, and thinking twice about buying houses. Consumers are also putting the brakes on general spending, as well as attempting to increase their savings before Brexit.
According to Independent, the number of people who have made adjustments tops 4 million UK consumers, with 63 per cent reporting decreased spending, 46 per cent upping their savings contributions, and another 27 per cent choosing not to take family holidays this year. Some citizens may also put off retirement, until after the Brexit complexion clears enough to adequately assess financial conditions.
Some analysts view the Brexit-related attention to personal finances as a blessing in disguise. Saving more money, maintaining a fallback fund worth 3-6 months of customary expenses, and consulting independent financial advisors are seen as prudent moves, with or without Brexit on the horizon. The increased scrutiny brought on by Brexit concerns may actually have a stabilising effect in some households.
The final word has yet to be spoken about Brexit, but it appears the government has adopted a no-deal transition as the default scenario. Whether or not the new government can move the needle, negotiating a deal, UK consumers remain caught in the middle, unsure what to expect and tentative about making meaningful financial moves.