30 September 2019

How are personal finances affected by Brexit uncertainty and what we can do about it?

a Brexit Barometer report, by Royal London

7 min read

 

Share

Brexit may not have yet happened, but as a nation, we are already responding in the way that we manage our finances day to day and also our financial plans for the future.

How are we feeling about the impact of Brexit on our personal finances?

Uncertainty around Brexit has caused more of us to worry about our financial situation in a post-Brexit world – increasingly so, with more than one in three people in Great Britain (36 per cent) expecting their finances to worsen after Brexit, according to a YouGov survey on behalf of Royal London.

Only 6 per cent of the population is optimistic that Brexit will lead to an improvement in their personal finances.

That’s six times as many people who are feeling pessimistic rather than optimistic across Great Britain as a whole.

The level of pessimism has increased since Royal London began tracking Brexit sentiment a little less than a year ago. There has been a similar increase in the proportion of people who expect things will stay the same. Meanwhile optimism has declined. There has been a decrease in the number of people who say they “don’t know”, suggesting people are becoming more certain that there will be an impact on their finances, one way or another.

In this report, we look at the state of the nation’s finances in the final 30 days before Brexit (October 31); how money worries have risen in the last 12 months specifically as a result of Brexit uncertainty and what as individuals, we can do to take back control of our own financial wellbeing.

Table 1.1: Expectations for personal finances after Britain leaves the EU, GB

When Britain leaves the European Union, do you think your own personal finances will get better or worse, or stay much the same? August 2019 May 2019 February 2019 November 2018
Will get better once Britain leaves the EU 6 10 9 8
Will get worse once Britain leaves the EU 36 36 35 32
Will stay the same 42 37 39 38
Don’t know 16 17 17 23

Regionally, expectations look more mixed, as you can see from table 1.2 below. Those in London and Scotland are on the whole more pessimistic than in other regions.

Table 1.2: Expectations for personal finances after Britain leaves the EU, regional

When Britain leaves the European Union, do you think your own personal finances will get better or worse, or stay much the same? London Rest of south Midlands/ Wales North Scotland GB Whole
Will get better once Britain leaves the EU 6 6 8 7 3 6
Will get worse once Britain leaves the EU 47 36 30 31 47 36
Will stay the same 33 45 45 42 33 42
Don’t know 15 14 16 19 17 16

Interestingly, older men have become increasingly pessimistic in the last few months, with the proportion of men over 50 who expect a financial improvement dropping from 20 per cent in May 2019 to 10 per cent now.

Table 1.3: Expectations among men aged over 50

When Britain leaves the European Union, do you think your own personal finances will get better or worse, or stay much the same? August 2019 May 2019
  Men 50 to 64 Men over 65 Men 50 to 64 Men over 65
Will get better once Britain leaves the EU 10 11 18 22
Will get worse once Britain leaves the EU 33 27 36 20
Will stay the same 45 56 34 47
Don’t know 13 6 12 11

Are we already taking action?

On the whole, no.

More of us have changed something about our finances as Brexit draws nearer, with 11 per cent saying they had already made changes, up from 8 per cent six months’ ago. Men were more likely to say they had made changes than women.

But we are not all feeling equally worried and prone to act, with 82 per cent of people saying they had not yet made any changes.

Among those that have made changes, a reduction in spending, an increase in savings and a decision not to go on holiday were the top responses to the question: “Which, if any, of the following changes have you already made?”

Here is what some respondents who said they had made ‘other’ changes said they had done:

  • “Arranged more borrowing”
  • “Avoided selling shares due to uncertainty”
  • “Bought items that are imported from other EU countries before the price rises”
  • “Bulk buying food and seeds to produce my own food”
  • “Changed investment balance”
  • “Changed jobs and now get my salary in euros”
  • “Changed my investments”
  • “Changed my pension funds to cash”
  • “Changed to a higher paying job to save”
  • “Chose fixed mortgage period to avoid brexit”
  • “Delayed buying a house/getting a mortgage.”
  • “Digging up the lawn to plant vegetables”
  • “Going straight to uni for a more employable job for fear of a recession”
  • “Got a redundancy insurance”
  • “Held off paying debt in other currencies”
  • “Held on to foreign currency and been more cautious about committing myself to investments.”
  • “Invested outside the UK”
  • “Kept dollars”
  • “Looked at moving abroad”
  • “Moved assets”
  • “Moved equities into bonds”
  • “Moved investments into safer funds”
  • “Moved the a fixed rate mortgage”
  • “Moving abroad”
  • “Not buying a new car”
  • “Paid off mortgage”
  • “Purchased house abroad”
  • “Putting off major spending so I can see what happens first”
  • “Savings in long term rates”
  • “Spread investment globally”
  • “Stockpiling food and medicine”
  • “Stockpiling non-perishable food items”
  • “Transferred investments to the EU”
  • “Trying to pay off credit card faster”

How are we divided on the likely impact on our finances?

British people are divided in their expectations by age, gender and region. Not surprisingly, how they voted in the referendum influenced their responses, with only 1 per cent of Remain voters saying they expected an improvement in their finances after Brexit, compared with 12 per cent of Leave voters.

In contrast, 62 per cent of Remain voters expect their personal finances to get worse after October 31, against 12 per cent of Leave voters. Just under a quarter of Remainers (23 per cent) expect their finances to stay the same, compared with 64 per cent of Leave voters.

Men are more certain than women that there will be an impact, with fewer men than women saying they don’t know what to expect (11 per cent of men compared to 20 per cent of women).

Interestingly, younger women aged 18 to 24 are the least sure of the impact of their finances, with 35 per cent saying they don’t know how Brexit will impact them.

However, confidence in the status quo appears to increase with age. Older men and women aged over 65 are much more likely to say that things will stay the same.

Men have become more pessimistic and women more optimistic about the outcome for their personal finances after Brexit in the last three months.

Table 1.4: Expectations for personal finances once Britain leaves the EU by gender May 2019

Personal finances will… Men % August 2019 Men % May 2019 Women % August 2019 Women % May 2019
get better 8 14 5 7
get worse 39 37 33 35
Stay the same 42 36 42 37
Don’t know 11 13 20 21

Table 1.5: Expectations for personal finances once Britain leaves the EU by age group August 2019

Personal finances will… Age 18 – 24 Age 25-49 Age 50-64 Age 65 or over
get better 5 5 8 8
get worse 50 39 33 25
Stay the same 24 35 46 58
Don’t know 21 20 13 8

Has Brexit caused delays to big financial decisions?

Around ten million Brits – 19 per cent of the population, have put off making a big financial decision as a result of Brexit, up from 16 per cent reporting that they had delayed a big decision three months’ ago.

 There were increases in the number who had delayed buying a home to 34 per cent of those who had delayed a big decision (up from 29 per cent of those who had delayed a decision last quarter to 34 per cent, or 2.7 million people).

The proportion of those eight million delaying a holiday fell from 46 per cent in February to 38 per cent, perhaps reflecting a seasonal dip in holiday buying, while the proportion delaying a car purchase was 23 per cent.

The proportion of those who have put off a decision to retire is 10 per cent of those delaying a big decision, equivalent to around 950,000 people, based on Royal London analysis of ONS data.

Table 1.6: Have people put off big financial decisions?

  28-29 Aug 2019 29-30 May 2019 19-20 Feb 2019
Have you put off making a big financial decision because of uncertainty around Brexit?      
Yes, I have put off making a big financial decision 19 16 15
No, I have not put off making a big financial decision 73 77 79
Don't know 7 7 6
You previously said that you have put off a big decision because of uncertainty around Brexit. Which, if any, if the following big decisions have you put off? Top three      
Booking a holiday 38 36 46
Buying a house 34 34 29
Buying/leasing a car 23 29 26
Retirement 10 14 9
Starting a business 9 8 7
Having a child 3 6 5
Other 21 14 14
Don't know 9 3 4

*Source: YouGov, Royal London

Food, currency weakness and energy prices top list of concerns

A rise in the cost of food, a fall in the value of the Pound and an increase in the cost of energy were the top three biggest concerns among those fearing the worst for their money, with 91 per cent of this group – approximately 16 million GB adults - expecting the cost of food to go up, the survey found.

Meanwhile 89 per cent (equal to almost 14 million GB adults) of those who expect a general decline in their financial situation believe the value of the Pound will fall and 77 per cent think the cost of energy will rise after Brexit.

Biggest concerns August 2019 % (of 36% of GB adults who think their personal finances will get worse) May 2019 %
Rising cost of food 91 92
Fall in value of the Pound 89 86
Rise in cost of energy 77 77
Rise in cost of borrowing 43 45
Rise in cost of housing 42 38
Fall in income 37 31

Source: YouGov, Royal London