Brexit day has finally taken place but there are still a tonne of questions that you need answering. After all, it’s not like we’ve been given clarification on much from the government.
The first thing to remember is that we are in a transition period throughout 2020. Whilst specifics are worked out with the EU, not much should change – it’s likely that any major decisions that affect our money won’t come into force until 2021 at the earliest. Frankly, there are still very few ‘definites’ about the future now that we’ve left the EU.
Still, it’s always good to be prepared. Here, we’ve looked into what you should expect for your money now that Brexit is officially underway.
- How will Brexit affect the pound?
- Will jobs be affected due to Brexit – and how?
- What could happen to prices now we’ve leave the EU?
- How will Brexit affect the economy overall?
- What does leaving the EU mean for our holiday money?
- Where can I find more facts about leaving the EU?
It’s no secret that the pound hasn’t been doing great recently – something that Brexiteers and some business owners saw as a reason to push Brexit through on the agreed date (31st January, if you haven’t been paying attention). Why did they believe that guaranteeing leaving the EU on the planned date would stablise the pound? Because uncertainty in international markets, which often comes from lack of clarity, means weaker currencies. So if Brexit was guaranteed to happen, the pound would stabilise – as it did in the closing days of January.
Well, we’ll reserve judgement on that. In fact, the stability of the pound is affected by many things, and is far from certain. After initially strengthening on Brexit day, the pound took a drastic hit when people sobered up and realised that a no-deal – yes, still something we’re potentially facing – could still become a reality. As the first week of February drew to a close, the pound had bounced back against the euro. But for how long?
Really, it’s impossible to say. All we know is that the pound is strong when situations look certain – it climbed when Boris Johnson’s Brexit Bill passed in Parliament, for example, and whenever there is talk of leaving with a deal.
How to know what the pound is doing
If you want to keep an eye on the pound, keep an eye on the news. The hard and fast rule is this: if negotiations are going well, the pound is likely to be strong. If it starts to look likely that we’ll crash out without a deal, the pound is likely to plummet too – and is likely to remain low for at least a couple of years, if that turns out to be the case.
If the pound does drop hard, there will be negatives consequences for…
- Our spending money when we go on holiday abroad (not just EU countries but other countries, as the pound will drop against other currencies too).
- The price of goods in the shops, as we import more than we export. This means your weekly shop is likely to increase in price.
However, it will be good for…
- Exports, because the lower our currency, the cheaper our goods will be for foreign countries to buy. It would be good for our economy and for jobs as we could be in a position to sell more goods abroad… although it is likely that it’ll take a good few years to sort out our trade agreements, so this isn’t likely to be an immediate benefit.
Again, there’s very little certainty on this. Many speculate about what might happen, but whilst we’re in the transition period, with nothing worked out re free movement or what kind of immigration Britain will accept after 2020, that’s exactly what it is – speculation.
Here are a few things that could happen, although of course nothing is guaranteed:
Brits could lose their right to work for European companies, even if the jobs are based in the UK.
Ryanair has hit headlines recently, after a recruitment day in Manchester advertised for applicants with the undisputed right to work in the EU. The airline’s staff could be based in any of the airline’s European hubs, so it makes sense that Brits might not be suitable for this work if free movement ends after December 2020 (the company is of course Irish, and based in Dublin). Ryanair were quick to state that they’d be looking at their policy before the end of the transition period.
Unemployment could increase
The refrain is that migrants take jobs from British workers, but evidence shows that not to be the case. In fact, because migrants liberally spend the money they earn working, they actually create more jobs than they take. A reduction in the number of migrants could therefore mean fewer jobs available, and greater unemployment. The study that suggests this was focused on London though, so this might not be true of other areas.
Businesses could move abroad and lay off their British staff
Workplaces rights could disappear
Rules including working time regulations and protections for agency workers come from the EU, so companies could choose to change their policies after the transition period.
The government could choose to protect British businesses
As this blog from experts at the London School of Economics points out, the government’s bailout of regional carrier Flybe suggests that it is committed to protecting companies that bring real value to regions outside the capital. It remains to be seen whether it’ll show long-term commitment to other companies that might be in trouble.
We import more than we export. So, there’s a big chance that the prices of things like food will go up as a result of Brexit. How much it changes largely depends on how stable the pound is. Of course, it’s hard to know whether the pound will be plummeting or gaining strength month-on-month. When the pound is low, things like food and petrol go up in price, at least in the short term.
At the moment, this looks likely – especially because chancellor Sajid Javid has vowed that Britain will end its current alignment with the EU after this year. The Food and Drink Federation warned that moving away from EU rules is likely to cause food prices to increase.
Again, no one really knows. It’s a huge question, with lots of different variables.
The state of the economy in the long-term hinges on factors, including:
- Our ability to retain businesses already based here, particularly big financial companies in the City and manufacturing companies that have factories here
- Whether we can renegotiate good trade deals with EU countries (which could take a few years)
- If we can persuade businesses from non-EU countries to come and set up here. There hasn’t been much talk of companies moving into Britain yet, though….
- Demonstrating to the world that our economic strength is to be reckoned with even though we are no longer part of the EU club
As LSE’s Vicky Price says, “There is not enough clarity about where we’re going to end up and therefore what the implications for the economy will be.” We’ll keep you posted when we know more…
What could happen to our holiday money now we’ve left the EU?
Of course, it’s also natural to be wondering what all this might mean for our holiday money – especially as now is the time that we’re likely to start looking forward to the summer and planning where we might want to jet off to.
So, is your holiday money likely to cost more this year?
Once again, it’s hard to know. Rob Stross, CMO of currency exchange platform WeSwap, believes planning as early as possible is the best possible way to mitigate risk.
Stross says: “There are lots of factors at play at the moment and it is near impossible to predict exactly how Brexit will impact our everyday lives. It could also impact our freedom to travel to all corners of the globe… it is best to prepare as early as possible for any possible outcome.”
He adds: “For holidaymakers looking to get travel money, it may be more difficult to plan when to buy currency. It’s also more challenging to predict the value of the pound in the upcoming months.
“In light of this uncertainty, it is always best to exchange money as early as possible. Last minute travel money purchases, in locations such as at airport bureaux, always lead to less bang for your buck as merchants are able to offer whatever exchange rate they like, knowing holidaymakers have no choice but to accept.
“As for those who are concerned about the possibility of the pound’s value falling further due to current political events, it may be best to buy half of your holiday money today and half later. That way, you can assure that you avoid paying higher rates on all of your cash.”
The reality is that we don’t know, and it’s hard to reliably predict. But keeping a close eye on the issue and taking advantage when the pound is doing well is the best thing to do.
After years of speculation, we’re starting to get more facts about what Brexit might look like. There’s still a huge way to go and a mountain of issues for the government to tackle to 2020, though. Until a deal with the EU is reached and agreed upon, nothing is certain.
For now, there are clear and impartial reports on the Brexit section of the BBC website, and in their Reality Check section, which fact-checks the various claims and counter-claims in the debate alongside other world news.
Remain-leaning organisations are fully committed to holding the government to account over the facts, too. Try Britain Stronger in Europe for analysis.