Brexit: The effects of a falling pound on your finances

Piggy bank

Following the historic vote to leave the European Union in the recent Referendum, the pound fell to its lowest level in more than three decades. This will have an effect on the finances of many people, but in what way?

Firstly, holidaymakers. The weakened pound now means that you end up with fewer dollars or euros when you exchange your money. This results in your spending money abroad not lasting as long as it would have done, as well as the cost of accommodation rising.

Some airlines have also said that they expect flights to become more expensive now, although this remains to be seen, as not all companies agree. It may be that travelling abroad becomes more expensive, but the UK’s domestic tourism industry receives a boost, as more people choose to stay in the UK.

For shoppers, expect prices to increase. This is because retailers face higher costs when importing goods and services from abroad, and therefore this increase will transfer to their customers. This is expected for a range of areas, from supermarkets to petrol prices, with a price rise of approximately 2p per litre predicted in the immediate aftermath of Brexit.

For those who work abroad, any expats paid in sterling can expect to see their wages fall, due to the pound falling against the euro. This decreases the ‘purchasing power’ of expats, although for those paid in euros, there shouldn’t be an effect on their salary.