Brexit: The Four Things To Be Aware Of
These are the FOUR things I’ve pulled out of the BREXIT vote to be aware of:
The value of the pound has fallen. The £ would buy about $1.48 a month ago (and also about a week ago) and now it will only buy about $1.33.
The same for Euros. A month ago (and a week ago) every £ would buy 1.30 euros and now it’s about 1.2.
This means that holidays are going to be more expensive: partly because your spending money will buy less when you get there and also because some parts of holidays will cost more. So if you’re paying for hotels or services locally you won’t get as much for your £.
BUT ‘staycations’ will be in and more people will holiday in the UK! That’s great for business in many of our areas: Brighton, Eastbourne etc
Generally, costs are likely to rise because we are a net importer of ‘stuff’ by about £11.5 billion. (imports £ 41B: Exports £29.5B) so all that stuff has now become more expensive because of the pound falling. As businesses buy in their stock of ‘stuff’ from abroad the price rise will be passed onto the consumer:
First to rise is likely to be petrol: some estimates are that petrol will rise by 2p – 3p this week – and some estimates say it will rise by 10p within a month.
Whenever there is economic uncertainty as we have now; the property market tends to stagnate because people are frightened to buy and sell because they don’t know what’s going to happen.
So there will be fewer transactions and that’s likely to lead to a stagnation or even a drop in housing prices but I don’t think it’s going to be a huge drop.
The good news is that mortgages are likely to be a bit cheaper as many people predict an interest rate reduction in the next couple of months.
Firstly, state pensions – and any other state benefits aren’t going to change – so don’t panic if that’s you because nothing will change there.
But private pensions and corporate pensions MIGHT reduce (IF YOU TOOK THEM OUT TODAY!) and that’s because most pension funds are invested in the stock market and the European stock markets have taken a bit of a tumble. How much your fund is affected will depend on whether the investments are UK only or European wide or global.
But the good news is: not as much as people think:
So, although there’s been some big ups and downs in the last week the FTSE 100 is at 6,140 today compared to about 6,200 3 months ago. That’s basically only a 1% movement over 3 months.
Pensions are important and can be complicated: so go and speak to your pension fund provider or financial adviser if you think you have been affected.