Thursday 27 October 2016

Charlie Weston: What Brexit means for your pocket, pension and getting work in Britain

Published 25/06/2016 | 02:30

'Some people have become alienated: the British were first to act on it. But Britain is a loss to Europe, and to Ireland.'
'Some people have become alienated: the British were first to act on it. But Britain is a loss to Europe, and to Ireland.'

THE dramatic vote by the British public to reject European Union membership will have a lasting and deep impact in this country.

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So what exactly does it mean for consumers here?

Q: Will our economy suffer?

A: There is little doubt the economy will take a hit.

The plans for a €1bn give-away in the next Budget due to the so-called fiscal space is likely to be shelved, despite Finance Minister Michael Noonan yesterday insisting his Budget 2017 plans were unaffected.

Brexit could knock between €1.1bn and close to €3bn off gross domestic product (GDP) here.

Exchange rates displayed at a currency exchange in London
Exchange rates displayed at a currency exchange in London

Chief economist with Merrion Stockbrokers Alan McQuaid said: "From an Irish perspective, we think the negative referendum outcome will hamper economic activity here at home in the second half of the year, possibly knocking up to half a percentage point off GDP growth."

Read more: Don't stay calm and relax, this result is a massive threat to Ireland

The knock-on effect of a UK withdrawal from the EU will be initially felt by exporters. Consumer confidence across Europe will take a hit. Brexit will not help an already shaky Eurozone economy.

Sterling tanked yesterday. That will make Irish exports to Britain more expensive, but the cost of imports from Britain should fall. Trade between UK and Ireland is worth €1.2bn a week. A major slowdown, or even recession, in the UK will impact that trade. Brexit could also add to Ireland's cost of borrowing.

Q: What about my pension fund?

A: Stock markets went into meltdown yesterday. The fall in share prices in Ireland, Britain and on other European markets will hit pension fund savings in the short term.

Markets were taken by surprise by Britain's decision to leave the European Union. Billions of euro of pension funds are invested in shares.

The huge uncertainty will mean the pension funds will take a hit. Those close to retirement should have their funds invested in cash and bonds.

Read more: 8 biggest changes Brexit will cause for Ireland and the Irish

Q: I get a pension from the UK, or have savings in the UK. Is there a risk?

A: Your British pension is safe. But it will be worth less when converted into euro, due to the crash in the value of sterling. British savings are covered by a protection scheme up to the value of €75,000 per financial institution.

Q: Will it mean shopping over the Border and online will be cheaper?

A: Border towns will be hit by the fall in sterling because shopping will be much cheaper in the north of Ireland. Goods sold online that are priced in sterling should be cheaper.

Q: What impact will it have on farmers?

A: A weaker sterling puts farmers at a competitive disadvantage. And Britain could do trade deals with the likes of New Zealand, Argentina and Brazil, which would weaken demand for Irish agricultural experts.

The UK withdrawal will have negative implications for the Common Agricultural Policy funding as it is a net contributor to the EU budget.

Q: Will Irish people still be able to work in the UK?

A: There is a major risk that Britain could impose quotas on the numbers of people from EU states allowed to work there. This could impact on people seeking work in Northern Ireland, England, Scotland and Wales. Ireland and the UK have a Common Travel Area agreement, but its continued existence may now be in doubt.

Read more: Richard Curran: Our recovery will be hit hard now we have lost a great ally in Europe      

Irish Independent

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