Reality check guides should we see a no deal Brexit

24 August, 2018

Simon Eastman

Yesterday saw the release of around a third of the government reality check guides should we see a no deal Brexit in March next year.

Dominic Raab released the papers to give an idea of what conditions may be like should this scenario happen so businesses and households can be prepared for how life might be and it certainly wasn’t a pretty read. We have been warned about the credit card tax, which will cost UK consumers around £166 million, because the UK will lose access to the EU banking and payment systems, meaning higher costs to process payments and slowing down transaction times. This will not only affect card payments but all payment services businesses and banks, meaning sending those euros to Spain for that property purchase, may well take a little longer than the silky smooth service currently offered by Currency Index.

Expats were warned they may lose part of their pensions and health care they currently enjoy without a reciprocal health care deal, although bilateral deals with individual EU countries could be agreed according to Raab. Companies who import goods from Europe have been warned of the hurdles they’ll need to jump over to carry on “business as usual” with a series of steps needed to bring goods in including registrations, international contract, import declarations, customs brokers and additional warehousing all possibilities. All of these extra measures will ultimately cost time and money which as always, would be passed on to the consumer.

Nothing is certain as yet, a deal could still be agreed in the 200 odd days left before the 29th March 2019 deadline, but markets certainly took the doom and gloom to heart yesterday as the pounds demise continued, reaching fresh lows against the single currency and making losses against a basket of major currencies over the day. There was a raft of PMI data on services and manufacturing from across European countries and the EU as a whole, which actually came out under expectations, while the UK CBI trades survey beat expectations considerably, but to no avail for sterling. In the afternoon, the US released its PMI figures plus housing data, which all came out under forecasts, but despite the poor data and Trump coming under the spotlight again over claims he broke the law in his campaign trail, the dollar made gains against the pound also.

Today we have German GDP this morning plus UK mortgage approvals, while after lunch we have US durable goods order and a speech from Fed chief Powell. Will the figures actually have any effect or will we have much of the same for sterling today? If you have a currency transfer to make, the last few weeks have shown waiting can be costly, so don’t delay, give one of the CI team a call today to discuss your options.