More than three years after the Brexit referendum and with another deadline looming, it’s not surprising that Brits are feeling uncertain about their financial future. Research shows the impact of Brexit is as polarising as ever and millions of people are putting off making financial decisions.
Brexit: What’s happened?
The Brexit referendum was held on 23rd June 2016 and whether you voted to leave or remain, you probably didn’t imagine that it would still be a hot topic of conversation, continuing to grab headlines.
After the leave vote just scraped a majority, securing 51.9% of votes, the Government invoked Article 50 in March 2017, starting what should have been a two-year process for the UK to leave the EU. However, the original exit date of 29 March 2019 has passed by and we’re still a part of the EU with no clear details on when or how the UK will leave, if at all.
The delay, in part, has been caused by MPs voting down former prime minister Theresa May’s Brexit deal, negotiated by London and Brussels, several times. Ultimately, it led to Theresa May resigning at the end of May and a battle for the Conservative leadership. With Boris Johnson now at the helm, it seems the UK is set to leave the EU on 31 October 2019. But whether it will be with a new deal, the deal put forward by Theresa May, or with no deal at all, is still uncertain.
Putting off decisions
With so much political and economic uncertainty over the last few years, it’s unsurprising that many people want to keep a close handle on their finances. A poll from Royal London found that 16% of people have off big financial decisions as a result. That’s the equivalent of eight million. Among the decisions that have been delayed were:
- Booking a holiday
- Buying a house
- Buying a car
However, the reason for holding off decision making may be for a variety of reasons, including believing that Brexit will either positively or negatively affect personal finances.
- 36% of British adults (18 million people) think their finances will worsen after Brexit
- 10% (five million people) think their finance will improve
- 10% have also specifically made changes to their finances because of Brexit
Becky O’Connor, Personal Finance Specialist at Royal London, commented: “The UK is becoming united in its uncertainty that Brexit will have an impact on their personal finances. However, Brits are becoming more polarised about whether that impact will be positive or negative.”
Should you respond to Brexit concerns?
With Brexit featuring heavily in the news, you may be wondering whether you should change your financial position in response. However, you shouldn’t base financial decisions on just one external factor. It’s important to remember that your financial plan has been built with your objectives in mind. A knee-jerk reaction to Brexit could put achieving your goals at risk. So, what can you do?
1. Focus on the bigger picture
With the level of coverage Brexit is receiving, it’s easy for this to become the focus of your financial decisions. However, you and your future should still be the centre of your financial plan. Taking a step back and assessing your financial situation is more important.
It’s important to consider your priorities. Would the outcome of Brexit change your desire to buy a house or start a family, for example? It’s unlikely that your life plans hinge significantly on what happens over the coming months. Whilst it’s natural to worry about the uncertainty Brexit has caused, delaying decisions could be harming your future. Assessing the effect of Brexit on plans when you look at the long-term outcomes is important.
2. Ensure you have a financial safety net
Proceeding with plans amid uncertainty can be a daunting prospect. Taking steps to ensure you have assets to fall back on can provide you with the confidence needed to move forward.
For example, if you’re making withdrawals from investments to create an income, you may be worried about the effect short-term dips will have on the overall value. Having a financial safety net or other assets you can fall back on, such as cash savings, means you don’t have to make withdrawals during temporary dips in the market. This will help preserve the value of your investments.
Assessing your financial resilience can give you peace of mind.
3. Review investments and other financial strategies
It’s advisable that you review your financial plan at least once a year. It provides you with the perfect opportunity to address Brexit concerns and make adjustments where necessary. However, tinkering with plans that have a long-term focus should be cautioned against. It’s impossible to know what Brexit means in the long term at this stage, but that’s what your financial strategies should focus on.
That being said, you may find that during your review there are areas that should be adjusted. For example, perhaps the asset allocation of your portfolio should be altered to suit your risk profile, given the uncertainty Brexit is causing. If you’re worried about your financial position in light of political uncertainty, please get in touch. We’re here to help you manage your financial future and give your confidence in the decisions you make.