Brexit Briefings: What Brexit Could Mean For Your Savings

With Brexit getting ever closer – the UK is due to exit the EU on 29 March 2019 – we’re running a series of blog posts about what Brexit could mean for your finances.

In this post we’ll take in some thoughts from a variety of commentators on what they believe Brexit could mean for UK savings.

* Firstly, interest rates. In what is broadly good news for savers interest rates seem to be on an upswing right now. However, as reported by the BBC the Bank of England Governor Mark Carney has indicated that interest rate rises could be slowed or potentially even be reversed in the event of a ‘disorderly Brexit’.

Simon Lambert of This Is Money considers the different potential scenarios for future interest rates, including both cuts and even a rise to 4% in the event of a chaotic Brexit.

* Speaking to The Guardian, Moira O’Neill, Head of Personal Finance at Interactive Investor, suggests that interest rates are likely to remain low and so savings kept in cash are guaranteed to lose value. She however, reminds savers that diversification is important as a no-deal Brexit could mean a period of volatility in the value of high risk investments.

She advises that savers diversify and spread their money between UK and overseas investments, plus consider lots of different types of investments, such as company shares, commercial property, government and corporate bonds, plus gold, and also that they consider using funds to do so.

* The Telegraph has expressed the view that Brexit isn’t necessarily the main issue to consider here at all and savers need to consider the global picture, including what Donald Trump is doing in the US. It says that if growth and inflation pick up across the globe UK savings rates will follow suit.

However it points out that, despite Trump’s intention to boost growth, opposite forces like deflation, ageing populations in Western countries, excess debt and overcapacity in many industries globally could conspire to keep growth and inflation low. It says that if this occurs savings rates will remain low whatever happens in Britain’s post-Brexit future.

* A side issue for savers to consider is the Financial Services Compensation Scheme or FSCS, which guarantees deposits. In an odd cause-and-effect scenario the current limit of protection was raised to £85,000 in 2017 as a result of a fall in the value of the pound largely due to the Brexit vote. It could change after Brexit because it will no longer be tied to the €100,000 threshold set by the EU.

Lastly, it’s important to bear in mind that what actually happens to your savings could also be affected by what (if anything) is agreed with the EU before Brexit day.

We hope you find these Brexit briefings useful. If you would like to find out more about the financial planning service we offer – or just find out more about W1 Investment Group – please contact us.

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