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What Brexit has cost us – one year on from the historic vote to leave the EU

What Brexit has cost us – one year on from the historic vote to leave the EU

On June 23, 2016, the British public voted to leave the EU by a margin of 52%-48%. A year later we ask what the decision has cost us and if anyone is better off as a result?

Sunderland has never had a bigger effect on the world’s financial markets than it did at 12:20am on July 24.

As the news broke that the north eastern city voted “Leave” by a margin 61% to 39% the pound crashed – it still hasn’t recovered – following the first clear indication that Britain had voted to leave the EU.

A year later, with the actual negotiations over the terms of Brexit only just beginning, the pound is down 20 cents against the dollar and 17 cents against the euro.

“The main financial effect of Brexit has been felt in the pound,” said Hargreaves Lansdown senior analyst Laith Khalaf.

 

But that fall in the pound has had impacts across a lot of other things.

“Weaker sterling has pushed up inflation and also boosted the stock market,” Khalaf added.

“Holidaymakers have probably been the most obvious losers from Brexit so far, though inflation is also gradually ratcheting up the pressure on consumers more broadly.”

What these changes actually mean

The harder the stance on Brexit, the worse the pound has fared

The fall in the pound has meant holidaymakers are getting €83 and $107 less than they would have if they exchanged £500 for their holidays a year ago, FairFX calculates.

But the real damage has been done by the impact this fall in the pound has made on everything else we buy.

With the pound 14% lower against the dollar and 13% lower against the euro, goods that either come from overseas – use parts that come from another country – have risen in price.

Worse, with oil priced in dollars that means the cost of moving anything around the country has risen, not to mention the cost of moving people around too.

That means prices are rising across the board.

Inflation

And while prices are rising, money in savings accounts (not to mention wages) aren’t keeping up.

In fact, the average saving account now pays less than it did a year ago.

Savings

That means the someone with £5,000 in the bank is losing £85 worth of value a year, Minerva Lending calculates.

The drop in interest rates has led to a small benefit for people with mortgages too – although nothing like as big an impact as it has on savings rates. Moneyfacts.co.uk calculates the average two-year fixed-rate mortgage now charges 2.27% interest, down from 2.58% a year ago.

And the people who are BETTER off

While the falling pound has hammered savers, holidaymakers and pushed up prices across the board, one group of people are rather happy about it.

Well-off Brits with money in the markets have done really quite well.

That’s because, while the FTSE 100 is priced in pounds, many of the companies in it make most of their money overseas. Thre result of this is a collapsing pound sees their values soar.

The average FTSE 100 saver with £42,000 in the markets on the eve of the referendum would now have £51,694, an increase of £9,694 – or 23% – if they remained invested throughout.

That’s according to research by investment site True Potential Investor.

“In the year since the Brexit vote, markets have performed exceptionally well,” said David Harrison from True Potential Investor.

“The FTSE 100 has hit its highest level on record. That has led to a savings surge for those who stayed calm and ignored the scare stories. They have seen thousands of pounds added to the value of their investments.”

Brexit is all right for some, I suppose.