How will Brexit affect my money?

We’re now six months on from Britain’s historic decision to leave the European Union. However, time does not appear to have illuminated much of the process, and many experts are still unsure of what ‘Brexit’ will ultimately look like… including many of the politicians involved.

However, we have already seen a number of market reactions, and Brexit has already begun to affect our earnings and savings. In this post, we’ll look at how Brexit will affect your money.

Earnings

Brexit has already had a huge impact on Britain’s economy in general, with the Financial Times reporting that it has “turned UK earnings upside down”.

Although the value of the pound dropped sharply following the announcement of the vote, we’ve since witnessed a recovery that very few (if any) properly predicted, and the FTSE 100 Index reached an all-time high within 110 days.

However, it’s not all rosy for everyone, and house builders, property developers, banks, insurers and high street retailers are all feeling the pinch.

The pound has also recovered from historic losses, reaching its highest level since July. Whereas exchange rates with the euro and dollar had been plummeting, meaning that the pound was worth less, it has now recovered, providing you with more spending power. With economic turmoil on the continent and political turmoil in America, this shows no signs of changing any time soon.

Savings

However, it’s not all good news, as experts predict that the savings rates will fall and inflation could rise as high as five per cent. This means that wages will be squeezed and the economy will begin to slow.

In addition, it’s not good news for pensioners and those saving to retire. In negotiating new trade agreements, the government may be forced to abandon the triple lock on pensions or may have to scrap generous tax reliefs on pension savings – watch this space closely as Britain’s plan to leave the European Union and negotiate new trade agreements develops.

Investments

Houses have been a popular investment over the past decade, but the market looks set to stall over the coming few years as buyers will lose confidence and consumers begin to tighten their belts, leading to the price of property falling. With the cost of mortgages also set to rise, now appears to be a good time to sell this particular investment before supply outstrips demand.

As such, it’s better to look for alternate investments. Financial market volatility means that the forex market is currently providing a number of opportunities, which makes forex trading with a broker like FX Pro a viable prospect. However, trading in these markets is highly risky. shutterstock_445268986So, if you’re naturally risk averse, then traditional investments may be more suited to you, even if potential returns could be lower.

To conclude, Brexit looks set to completely overhaul the financial outlook of the UK. Little is known about the UK’s exit plan as yet, so watch closely for further developments and how they may affect you.