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Will Brexit hit your pocket?
Your Brexit questions answered
While there’s still huge uncertainty over the UK’s departure from the EU, it’s worth preparing for the impact it could have on your finances.
We’ve answered some common questions here, but overall, much hangs on whether there’s a deal with the EU, and if so, what type of deal it is.
The deal proposed by the prime minister comes with a transition period during which not much would change: the UK would continue to negotiate with the EU on specific aspects of the relationship until December 2020, or potentially later.
Based on what’s known so far about all the possible outcomes, we’ll help you navigate this complicated topic, one step at a time.
What will change for UK laws and regulations?
At the beginning, not much. The EU has a whole lot of regulations on a range of topics, but each country independently incorporates them into its own legislation, which means that in most cases EU regulations are reflected in British laws.
Changing them would require parliament to vote to change those laws, so even if we leave the EU without a deal, EU regulations will not suddenly disappear leaving a Wild West of unregulated areas.
However, after Brexit, it will become possible for parliament to change all those laws. Parliament may decide to change some: there will be many political choices to be made.
How will Brexit affect the pound?
That’s one of the questions no one can answer yet. Immediately after the 2016 referendum, the pound lost about 20% of its value and never entirely got it back, but it isn’t easy to predict what will happen now. It will mostly depend on the Brexit deal: if the prime minister’s deal is approved by parliament, it’s likely that sterling will rise in value. A no-deal Brexit is expected to see sterling’s value fall.
Our Brexit exchange rate tracker shows you how the pound has been doing in the last couple of years and which political events seem to have influenced its value.
But what does all this mean for your pockets?
- If the pound goes down. It becomes more expensive for Brits to travel abroad. Imported goods’ prices are also likely to increase, because UK retailers and companies spend more to purchase the same products, and in many cases will pass the increase down to the customers. Among the top 20 commodities imported by the UK are cars, medicines, clothes, vegetables and fruit, and meat – so a fall of the pound may have very concrete consequences on your daily budget. At the same time, a decrease in the value of the starling makes the UK cheaper for travellers from abroad, potentially attracting more tourists.
- If the pound goes up. Conversely, it becomes cheaper to travel abroad and imported goods may become less expensive – but companies that sell goods abroad also become less competitive.
How will Brexit affect my holidays?
Unsurprisingly, travelling to the EU is likely to change quite a bit because of Brexit – both while we wait for things to become clearer and after any exit from the EU comes into effect.
With Brexit being postponed from 29 March to 12 April, 22 May or potentially even later, those who have waited for the uncertainty to be over before booking their Easter or summer holidays are facing a bit of a dilemma. Waiting even longer means missing out on the best deals, but booking comes with the risk of being caught in post-Brexit travel issues – especially if we leave the EU without a deal.
If you do decide to go ahead and book a trip to Europe for spring 2019 or later, the next few questions should cover what you need to know and what you can do to be prepared for every eventuality. We’ll also look into what may happen in the long term.
Do I need travel insurance to travel to the EU after Brexit?
If you’re looking at travelling in the next few months, when the UK could leave the EU without a deal, you may want to protect yourself from potential flight and train delays or cancellations – which are a potential consequences of a no-deal scenario and the long queues at passport control it could entail.
A no-deal Brexit would probably be considered an “extraordinary circumstance” by airlines, in which case the usual compensation for delays and cancellations wouldn’t apply. So as ever, make sure you’ve got solid travel insurance.
Not all travel insurances include cover for delays or cancellations; some policies cover these only if they’re caused by strikes or other specific causes, Brexit not being one of them. Read the small prints carefully to avoid nasty surprises.
If Brexit actually happens and the uncertainty is over, everything will depend on the deal and the negotiations – but travel insurance may still be necessary to protect yourself against health accidents while travelling in the EU. More on this below.
Is my EHIC card still valid after Brexit?
If the current deal were to pass, the European Health Insurance Card (EHIC) would still be valid until the end of the transition period, in 2020. After that, it will depend on the negotiations between the UK and the EU – the government has said in an official report that it “wants UK and EU nationals to continue to be able to use the European Health Insurance Card (EHIC) to receive healthcare should they need it while on holiday,” but there’s no guarantee that this will happen.
However, if the EU and the UK were to disagree on this, or in a no-deal scenario, the EHIC wouldn’t be valid any more. Travel insurance would then become much more important, as any unexpected health accident would otherwise have to be covered by the travellers themselves – which can easily turn out extremely expensive.
Will I need a visa to travel to the EU after Brexit?
In the worst-case scenario, yes, but it looks quite unlikely. Here’s how things are looking so far:
- If we leave with the current deal. Nothing changes until the end of the transition period (2020). After that, Brits will need to apply for online permission to visit the EU – it isn’t exactly a visa, but a new document that will grant permission to travel to the EU for three years at the price of £7. The scheme, called ETIAS (European Travel Information and Authorisation System), will also apply to a set of other non-EU countries, such as Japan and Australia, and is expected to launch in 2021.
- If we leave without a deal. The European Commission has proposed that the UK is placed in the list of countries whose citizens can travel visa-free into the “Schengen area”, under the condition that the UK reciprocates. However, as of 25 March the proposal is yet to be approved. If this doesn’t happen before a no-deal Brexit, the UK will crash out of the EU without being either in the list of countries whose citizens need a visa to enter the Schengen area, or in the list of countries whose citizens don’t. In that case, there is a very slight chance that UK citizens may need a proper Schengen visa to travel to the EU, which currently costs €60 (around £52).
Can I drive in the EU after Brexit?
If we leave without a deal, driving in the EU will become more complicated. Here’s what you’ll need to do:
- If you are a UK citizen living in an EU country. In this case, the government’s advice is to change your UK driving licence for a EU one, and to do it as soon as possible. If you don’t and the UK leaves the EU without a deal on 12 April, “you may have to pass a driving test in the EU country you live in to be able to carry on driving there”.
- If you are a EU citizen living/driving in the UK. Nothing changes, and your European driving licence will still be valid. After you’ve been a British resident for three years, you’ll need to apply for a UK driving licence (no change from pre-Brexit arrangement).
- If you have a UK driving licence and are visiting the EU. In the event of a no deal, you will need an International Driving Permit (IDP) to drive in the EU. It costs £5.50 and can be bought at the Post Office. If you travel with your own card, you’ll also need a so-called “green card”, certifying that your insurance covers the minimum cover in the country you’re driving in. It can be obtained for free, but don’t leave it until the last minute, as it may take a while to get it.
Will Brexit affect my private pension?
In most cases, Brexit won’t affect a private pension, at least not in the immediate future. The UK pension market is mostly domestic, made of British pension funds managing British people’s pensions. However, there are a couple of things to consider:
- European pension funds operating in the UK. There aren’t many of these, but they operate in the UK only because their licence is “passported” thanks to EU regulations.
- Pensions fund investments. Pension funds’ results are closely tied to the UK economy. There has been no lack of attempts to predict Brexit’s impact on it, but again, it’s impossible to actually say anything about it beforehand, and much will depend on the final deal. However, if British economy were to sustain a major blow, it is highly likely that many invested pensions would also be impacted.
We’ll keep updating this page as more information emerges, to help you stay ahead.
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