EU Referendum - Don't Panic

Our Managing Director Paul Northmore reviews the commentary received following the UK's decision to leave the EU.

The people of the UK have voted to leave the European Union.
Not only is this is major financial decision for the country but this will also have wider implications for markets globally.
We have already seen an expected change with the value of the pound plunging but the message to our clients is 'Don't Panic'.

We have received articles today from Investment commentators.

It is still early days to comment confidently on the financial situation we will find ourselves in as we exit, but we are assured that the UK economy can handle this transition.

Neil Woodford has dismissed fears over the impact of the decision, concluding the long-term economic future of the country will be unaffected by the vote.

Bank of England -  'We are well prepared for this'

The Bank of England says it expects market volatility after the Brexit vote but that the UK economy can handle it.

Speaking at a press conference, Bank of England governor Mark Carney says: “Inevitably, there will be a period of uncertainty and adjustment following this result.
There will be no initial change in the way our people can travel, in the way our goods can move or the way our services can be sold.
And it will take some time for the United Kingdom to establish new relationships with Europe and the rest of the world.”

Carney added the Bank expects “some market and economic volatility” as those new relationships are struck.

He added: “But we are well prepared for this.  The Treasury and the Bank of England have engaged in extensive contingency planning and the Chancellor and I have been in close contact, including through the night and this morning.
The Bank will not hesitate to take additional measures as required as those markets adjust and the UK economy moves forward.”

What happens next?

The vote to leave followed by David Cameron’s announcement that he will resign before October's Conservative Party Conference, sets in motion a process that will trigger Article 50 of the Lisbon Treaty, the formal mechanism for withdrawal from the EU. Unless a withdrawal agreement is reached earlier, this will start a two year period of negotiation. During that time the UK will still be a member of the EU and bound by its rules and treaties.

So what does this all mean for your finances?

Mortgages

With regards to mortgages it really could go either way.
It's possible that the Bank of England may consider raising interest rates to counteract the reducing value of the pound, with the Treasury forecasting a rise between 0.7% and 1.1% in borrowing costs which David Cameron claimed may see increase of up to £1000 per year.
However in the case of a severe shock to the UK economy, the Bank of England might have to consider reducing rates. In which case, the cost of lending could fall.

House prices

According to the BBC The International Monetary Fund (IMF) has warned that Brexit could cause a sharp drop in house prices. This was on the expectation that the cost of mortgages would rise.

The Treasury has said house prices could be hit by between 10% and 18% over the next two years, compared to where they otherwise would have been. This would be good news for first-time buyers, but not so great for existing homeowners.

These projections would be incorrect if the Bank of England were forced to cut interest rates.

Pensions

In the short term we are told that Brexit is unlikely to have a significant impact on the UK pension plans. However, it will give the opportunity for the UK legislation to deviate from EU requirements in the future.

In the build up to the referendum the prime minister said that a Brexit would threatened the 'triple lock' for state pensions - the agreement by which pensions increase by at least the level of earnings, inflation or 2.5% every year.

Investments and Savings

The investment platform Hargreaves Lansdown has told its clients that it is impossible to know the long-term economic implications of Brexit on investments.
"We cannot assume an 'Out' vote will be bad for the long-term prospects of the stock market" it said.

UK shares may become less attractive to foreign investors and would therefore decline in value.  However shares may rise with company profits and with the pound weakening, exporters may benefit so the value of shares could rise.

It really is too early to say exactly what will happen.  Changes are already taking place as we write.  Please rest assured that we are keeping our eyes firmly on developments in order to advise you on your finances.

If you would like to discuss your situation please contact your adviser by email or by calling the Manning and Company office on 01752 837950 or for Anthony Trueman and Co 01822 859368.

You're married! Have you talked about finances?

Your wedding day has been and gone and now you can turn your attention to your lives as a married couple.

Have you talked about finances?  What do you want out of life?  Do you have the same financial goals as your new husband or wife?


Here's our guide to start you off in married life, for richer or for poorer.

What do you want?
Do you work to live or live to work?
You need to have the initial conversations with each other to make sure you are both thinking the same way about your finances. Money is often a big taboo subject, but having honest discussions about your wishes will establish if there are any differences in your views on how to handle your money.
Maybe one of you would like to save or have existing savings, the other may want to budget for holidays each year etc. Whichever way, be sure you are talking openly about your plans.

What's mine is yours
Do you already have a joint bank account? Will you now open one and put both your wages into one account or would you like to keep you money separate?
Many couples will have lived together for a while before the wedding so often these arrangements have already been made but after marriage you may like to reconsider or formalise your arrangements.
You may wish to consider that opening joint accounts links your credit reports.

Budget
We often find that one person oversees the finances in a marriage and sometimes this can cause friction if you have different ideas about your budget, so make a joint plan where you both understand your income and expenses. This can be as simple as listing all of your outgoings against your wage.
Do you go to the gym, do you need the latest Sky package? All these things that you may have just considered as a given need to be reviewed. What do you need and what do you want and does this fit in with your overall plans?

Protection
It's awful to think about it but what happens if the worst occurs?
Are you protected so that your mortgage and outgoings will be covered if one of you becomes critically ill or dies? If you plan to have children it’s a good way to ensure they would receive money to secure their futures if you were no longer there to provide for them.

Our advisers can talk to you about Life Insurance and Critical Illness Cover so that you have peace of mind whatever happens.

Write a will
Even if you already have a will it is likely that it will change or become invalid when you marry. If you've never had one - now's the time. A will ensures that what you have worked so hard for, passes to the people you decide at the right time.  We can guide you through the process so that you can ensure that your assets stay with your chosen people if the worst happens.

If you would like guidance on any aspect of your finances or to establish your long term financial goals together, speak to one of our advisers.