As with all discussions and opinions regarding Brexit, ask 100 financial advisers what might happen, and how might you prepare, and you’re likely to receive 100 different answers. At the moment, the best we can say is that the UK is facing its own equivalent of Noel Edmonds’ popular game show – Deal or No Deal. Unfortunately for the average saver or investor, this is a dilemma over which they have no control.
With the myriad opinions on all sides of the in/out, deal/no deal arguments, let’s try and summarise the expert, non-partisan views on what might happen. According to an early August article in the Financial Times, ‘Experts agree that sterling will suffer if Britain exits the EU without a deal.’1 And without a deal, the UK’s reliance on imports (we’re a nett importer, rather than exporter), puts the country at risk of increased inflation, meaning a rise in consumer prices – in other words, direct adverse impact on what Harold Wilson famously called ‘the pound in your pocket’.
One area that is traditionally of particular interest to Britons, is property. The feeling seems to be that as property values are at the mercy of other factors such as unemployment and general recession, it is impossible to speculate at the moment which way property prices will go in the event of a no-deal Brexit. But if no deal triggers a downward slide in the general UK economy, expect the housing market to follow suit.
Coupled with worries currently about potential trade wars and the world economy, markets are nervous at the moment and we have seen falls over recent weeks.
When it comes to your savings and investments the general advice is the same as it’s ever been – spread your risk, remain calm and stick to your longer term planning. Panic selling into falling markets may make short term losses worse, because if you intend to reinvest you may compound the problem by missing a bounce back up. “It is often wise to be a spectator rather than a participant in trading at times of high volatility”.
By making sure you have a long term plan in place, ensuring your investments are globally diversified and you have sufficient cash reserves to cover any essential or short term needs, you can give yourself the best chance of coming out of any short term Brexit or market falls in a positive way.
