How will a no-deal Brexit shape personal finances?

From driving and mobile roaming, to financial services and property, we explore the impact of the UK leaving the EU with no deal.

The government is set to sit down at the negotiating table with Brussels once again to thrash out a deal for when we exit the EU. But what happens if no deal can be agreed on?

The government has published a series of ‘no deal’ documents, setting out the implications of a no-deal Brexit.

We look at what it says it could mean for our personal finances.

Driving

UK driving licences would no longer be valid in the EU. The government recommends obtaining an International Driving Permit (IDP) in this scenario, as this would be recognised by EU countries. An IDP can be obtained for £5.50 from most Post Offices and the government says it would make extra provisions.

Financial services

Financial services such as savings accounts or insurance that you receive from companies based in the European Economic Area (EEA) should remain unchanged.

They would be given continuity of access to the UK under a ‘temporary permissions regime’ to ensure no one loses access to key financial services they use.

Similar regimes would be put in place for electronic payments and investment funds. However, the cost of card payments between the UK and EU countries could rise. This is because the current ban on card payment surcharges would become invalid, so businesses might start charging customers extra for using payment methods such as credit cards in transactions between the UK and EU.

Mobile roaming

Mobile service providers would no longer be obligated to waive roaming fees in the EU for Britons. However, the government says it would legislate to limit what providers could charge, set at a cap of £45 per monthly billing period for roaming.

Several of the largest mobile phone providers have already committed to not reintroducing roaming charges in the event of no deal. These include Three, EE, O2, and Vodafone, which together account for 85 per cent of the market.

Property

The government has not provided any specific documentation yet regarding the impact on the UK property market. But recent reports suggest the governor of the Bank of England, Mark Carney, told UK ministers that property prices could crash by up to 35 per cent, leading to some concerns that property price falls could cause their homes to tip into negative equity. This estimation is likely based on Bank of England ‘worst-case scenario’ stress tests on the economy.

The stress tests also reflected a worst-case scenario where interest rates rose to 4 per cent and unemployment jumped to 9 per cent.

Henry Pryor, an independent property expert, plays down the supposed forecast: ‘Don’t panic, this is highly unlikely to have been what the governor told cabinet, less than a year ago he explained in detail that the Bank of England had modelled the worst-case scenario of house prices falling by a third but that this is not what the Bank expects.

‘Prices may well slip in the first quarter next year regardless of a hard or soft Brexit – uncertainty just as we had over the Millennium Bug in 1999 will mean many buyers will postpone their purchase until next summer.

‘The Bank has planned for the worst but is not predicting that this is what will happen.’

This article was originally written by our sister publication Moneywise.

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