How will the process of the UK leaving the European Union affect your finances?
The starting gun has been fired on Brexit – but remember this is a marathon not a sprint. So how will the Brexit negotiations impact on our wallet?
1. The value of the pound could continue to come under pressure if UK economic growth forecasts fall as a result of a perceived unfavourable European deal for the country. This means going on holiday or buying goods originating from abroad (cars, computers, fuel and food for example) could continue to be more expensive than we are used to.
2. Inflation – driven by the fall in the value of the pound – is forecast to continue to rise. This could force the Government to increase interest rates – in turn putting pressure on over-extended house prices in some areas and potentially giving some hope for savers suffering from miserly returns. However, given the uncertainties around future UK economic growth the Chancellor is likely to hold off an any rate rises for as long as possible until the inflation situation becomes clearer.
3. A squeeze on household budgets appears inevitable. Wage increases are likely to lag behind the rising price of goods in many cases. We are going to have to look for money making opportunities to supplement our incomes (luckily if you are reading this you have found the right site to help)!
4. Stock markets don’t like uncertainty so they are likely to be relatively volatile, following the twists and turns of negotiations and political posturing. They have already benefited from the fall in the value of the pound – but exporters and those earning revenues abroad could continue to do well if the value of our currency remains in the doldrums.
It’s fair to say that there are so many unknowns at this stage that its impossible to predict the exact impact on your wallet. But its no time to panic. The most important thing is to try and take a deep breath, take a calm and rational view of Brexit news and views as they emerge and don’t make any hasty decisions about your financial future.