THE UK today signed a historic Brexit deal for when it leaves the European Union on January 1 – but what does it mean for your finances?
The last minute deal will allow us to trade freely with the EU without tariffs or quotas and brings to an end four bitter years of Brexit wrangling.
Exactly what this means for your finances depends on the finer details of the pact, which haven’t yet been revealed.
The Prime Minister will address the nation at 3pm today.
It came as:
- There was an eleventh hour row about protections for the UK car industry – which appeared to have been resolved
- Pizza was delivered to the Berlaymont HQ in Brussels late last night as crunch talks continued
- The pound soared against the dollar last night on hopes of a deal
- Already Brexiteers were grumbling about not having enough time to analyse the deal when it comes back to MPs
- Sir Keir Starmer is preparing to urge his shadow cabinet to back a Brexit trade deal – and could hold a meeting later today to get their backing
Here, we take you through how the deal may affect the cash in your wallet.
How will a deal affect the pound?
The pound was up by nearly two cents versus the US dollar at just over $1.35 at 8am this morning, compared to yesterday.
It has also climbed a cent versus the euro to just above €1.11.
Whenever it seems likely that the UK will leave the European bloc with a trade deal in place, sterling has strengthened.
It’s because the economy likes stability and predictability, and leaving with a trade deal in place means there will be less disruption for businesses.
It’s likely that the deal will strengthen the pound.
A stronger pound means holidaymakers will get more travel money when they go abroad as the exchange rate is better.
The Bank of England warned last week that “sterling would retreat” if the UK left without a deal.
It’s worth remembering though, it’s still 10% down compared to what it was on the day of the EU referendum 2016.
The pound slumped by 15% following the results which saw Brits vote to leave the bloc, trading at a 30-year low against the US dollar and other currencies.
How will a deal affect holidays?
Aside from getting a better exchange rate for your travel money, Brexit will have an impact on your holiday, particularly for travel insurance.
Last week, the Government said travellers visiting the EU who need ongoing, routine healthcare treatment will have it paid for up to a year after we leave the bloc, even in event of a no-deal.
Even so, some experts warn that policies could become more expensive.
Currently, UK citizens can get cover for medical costs when visiting a country inside the EU with the European Health Insurance Card (EHIC).
These cards enable the holder to access treatment at the same cost as locals – so if it’s free for them if it’s free for you, and if they pay then you pay the same rates.
But after December 31, 2020 – Brexit day – these will no longer be valid and Brits will have to pay extra to buy separate cover.
It comes as holidaymakers are already facing more expensive holiday cover due to the impact of the coronavirus pandemic.
In addition, new Brexit rules will require Brits to have at least six months validity on their passports, and animal owners to subject pets, including cats and dogs, to EU blood-tests before travelling.
Brits will also be advised to check their mobile phone provider’s roaming policy, as free coverage may end.
How will a deal affect food prices?
British trucking firms, supermarkets and other businesses warned that food prices could rise from 2021 if a trade deal isn’t agreed.
This is because while 55% of our food is provided by local producers, 26% is imported from the EU, according to the government.
With Britain’s Brexit transition period ending on December 31, a tariff would apply from January 1 2021 if a deal is not secured.