It’s the question on everyone’s lips at the moment. Should the UK leave the EU? The trouble is, so far, there’s been nothing but bluster and fluff from both sides of the debate, which has left the people of the UK with no actual evidence to allow them to make a rational decision.
What makes it even more difficult is that in most instances, the effect of the vote on most issues is subject to a lot of speculation. Leaving the EU might have a positive impact on our economic growth, for example, but it could just as easily have a negative effect. So, without any concrete answers available, let’s take a look at how leaving the EU could affect some areas of personal finance as we approach the referendum on 23 June.
We’re all going on a….
Summer holiday. Yep, let’s start with a fun one, as it’s one where we could definitely see an impact, given that for most of us each year it’s one of our biggest expenses. Some of the big players in the holiday and airline industries have already been voicing their opinions, with the Chief Executive of EasyJet, Dame McCall, taking to the Sunday Times to write “The EU has brought huge benefits for UK travellers and businesses. Staying in the EU will ensure that they, and all of us, continue to receive them. How much you pay for your holiday really does depend on how much influence Britain has in Europe.”
Does that mean that if we leave, we’ll lose some of these huge benefits? Quite possibly. What exactly are the huge benefits? We’re not sure, but it’s likely to be around things like airport charges, taxation on flights, and the ease of which people can move around the EU.
What about the other things that we take for granted when we travel. For example, the European Health Insurance Card (EHIC) that entitles you to healthcare equal to any resident of the country that you’re visiting? Will that go if we’re not part of the club and result in more expensive travel insurance? And will we suddenly find that our data roaming charges on our mobiles suddenly go back to astronomical levels if we’re no longer part of the deal that will see them scrapped from June 2017? All of these are points that might add quite a few pounds to the cost of our summer breaks on the beach if we decide to leave.
A rising cost of living?
One of the things we didn’t mention above was that if, as many predict, the pound weakens as we break from the EU, then your money won’t go as far when you’re abroad, making the holiday even more expensive.
But, more interesting is that when the value of sterling falls, the price of anything that’s imported rises. As 57% of our gas comes from abroad, that will mean an impact on our household bills. And of course, the price at the pump will also go up, as oil is traded in dollars on world markets, and a weakening pound against the dollar will exacerbate fuel prices that are already beginning to rise.
Less obvious things could also be affected. We import a wide variety of products, from wine to kids clothing to furniture to pastries, and all of it would potentially be more expensive.
But the real issue, as always, is…
Football. Could a reduction in foreign players from the EU coming into UK football help boost the chances of homegrown talent? Or would teams struggle to find players at the right price and standard if competition from Europe was removed? Would football become dull without the flamboyance of foreigners from the EU? It might also make it cheaper for fans, of course, but just think – no Tony Andreu! No Ivo Pinto! No Alexander Tettey! No Vadis Odjidja Ofoe. Would it even be worth watching Norwich without them?
Yes. Yes it would.
The issues around the so-called ‘Brexit’ are wide-ranging, with so many permutations it’s impossible to say for definite it would have this or that effect. There might be an employment boom as firms are freed from EU regulations. There might not. House prices might tumble as people from the EU living in the UK return home. They might not. Students planning to study in Europe might have to pay expensive international fees, rather than being charged the same as any EU national. They might not.
Even if the UK does leave, change will be slow, and there will be a lot of renegotiating to do, which might lessen the perceived negative impact significantly.
As the campaigns to leave or stay gather pace from April, there’ll be a lot more information to help you make up your mind. Until then, it’s not worth adjusting your personal finance decisions based on whether or not we’ll be part of the EU later on in 2016. But we will continue to watch with interest.
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