How do we think Brexit will impact our personal finances and what we can do about it?

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The reality of Brexit feels closer than ever, but as a nation, we remain divided in our expectations of how we think it will affect our personal financial fortunes.

In this report, we look at the state of the nation’s finances in the final weeks before Brexit (January 31); how money worries have affected us 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.

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

Greater certainty around Brexit since the result of the December 2019 General Election has fed through into greater optimism about its impact on our financial wellbeing, according to a series of quarterly YouGov surveys conducted on behalf of Royal London over the past year.

The recent General Election result seems to have reversed what was a general trend towards greater pessimism as Brexit approaches.

The proportion of the population feeling optimistic about the impact of Brexit on their money increased by 5 percentage points following the General Election, from 6 per cent to 11 per cent – the highest level of optimism recorded yet.

The December survey was conducted one week after the Conservatives decisive General Election victory, suggesting that the reduced uncertainty that resulted was more likely to make people feel more optimistic about the impact of Brexit on their finances.

More than one in three people in Great Britain (34 per cent) still expect their finances to worsen after Brexit. This represents a drop of 2 percentage points from 36 per cent in August 2019. However there are still far more people feeling pessimistic rather than optimistic: three times as many across Great Britain as a whole.

Over the last year, the average proportion of people feeling pessimistic rather than optimistic about the impact of Brexit on their personal finances has been 35 per cent, compared with 9 per cent on average who have felt optimistic.

The proportion of the population who expect their finances to remain the same has remained at around 39 per cent over the last year and has consistently been the most common response.

There has been a decrease in the number of people who say they “don’t know”, from 23 per cent in November 2018 to 16 per cent now, suggesting people have become more certain as Brexit approaches that there will be an impact on their finances, one way or another.

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? December 2019 August 2019 May 2019 February 2019 November 2019
Will get better once Britain leaves the EU 11% 6% 10% 9% 8%
Will get worse once Britain leaves the EU 34% 36% 36% 35% 32%
Will stay the same 39% 42% 37% 39% 38%
Don’t know 16% 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, December 2019

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 8% 11% 12% 11% 13% 11%
Will get worse once Britain leaves the EU 44% 32% 28% 35% 42% 34%
Will stay the same 35% 43% 43% 37% 29% 39%
Don’t know 13% 14% 17% 17% 17% 16%

 

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 22 per cent of Leave voters.

Interestingly, Leave voters have become significantly more optimistic in the last quarter – this 22 per cent represents a 10 percentage point rise on the 12 per cent who said they expected an improvement in August 2019.

In contrast, 64 per cent of Remain voters expect their personal finances to get worse after January 31, up 2 percentage points from 62 per cent three months’ earlier.

Just under a quarter of Remainers (23 per cent) expect their finances to stay the same, compared with 59 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 (12 per cent of men compared to 19 per cent of women).

Interestingly, younger women aged 18 to 24 are the least sure of the impact of their finances, with 32 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.

Table 1.4: Expectations for personal finances once Britain leaves the EU by gender December 2019 compared with August 2019

Personal finances will… Men % December 2019 Men % August 2019 Women % December 2019 Women % August 2019
Get better 14 8 8 5
Get worse 34 39 34 33
Stay the same 40 42 39 42
Don’t know 12 11 19 20

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 when we started the survey back in November 2018.

But we are not all feeling equally worried and prone to act, with 84 per cent of people saying they had not yet made any changes in December 2019.

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"
“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”

Has Brexit caused delays to big financial decisions?

Around 8.5 million Brits[1] – 17 per cent of the population, have put off making a big financial decision as a result of Brexit, down from 19 per cent reporting that they had delayed a big decision three months’ ago.

34 per cent of those who had put off a decision had delayed buying a house, 39 per cent (nearly 3.5 million Brits) had delayed booking a holiday and 24 per cent had delayed buying or leasing a car.



Table 1.6: Have people put off big financial decisions?

Have you put off making a big financial decision because of uncertainty around Brexit? December 2019 August 2019 May 2019
Yes, I have put off making a big financial decision 17 19 16
No, I have not put off making a big financial decision 75 73 77
Don't Know  8 7 7

 

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 39 38 36
Buying a House  34 34 34
Buying/leasing a car 24 23 29
Retirement 10 9 14
Starting a business 10 10 8
Having a child 6 3 6
Other 16 21 14
Don't know 6 9 3

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 88 per cent of this group – approximately 15 million GB adults - expecting the cost of food to go up, the survey found.

Meanwhile 74 per cent (equal to almost 12.6 million GB adults) of those who expect a general decline in their financial situation believe the value of the Pound will fall (a big drop from 89 per cent who said they expected a fall in the value of the Pound in August 2019) and 73 per cent think the cost of energy will rise after Brexit.

Biggest Concerns December 2019 % (of 34% of GB adults who think their personal finances will get worse) August 2019 % (of 34% of GB adults who think their personal finances will get worse)
Rising cost of food 88 91
Fall in value of the Pound 74 89
Rise in cost of energy 73 77
Rise in cost of borrowing 45 43
Rise in cost of housing 42 42
Fall in income 33 37
Source: YouGov, Royal London