What happens to my money on Brexit Friday?

The Brexit bus is coming and everybody is fearing the worst. But is everything really going to be that bad?

Third time lucky for Sajid Javid's commemorative coin which will finally go into circulation on 31 January (Getty)

After three years, two general elections, three prime ministers and an entire batch of commemorative coins being melted down, Brexit is finally happening this Friday.

Whether you’re planning a street party or a protest or whether you’re just sick of the whole thing, it is important to know what it might mean for your money. That way you can prepare for whatever may happen – good or bad – in the coming months.

How you feel about your finances post-Brexit is unsurprisingly affected by whether or not you think Brexit is a good or bad thing generally. Just over a third of people believe they will be worse off post-Brexit, according to research by Royal London.

This belief rises to nearly two-thirds of those who voted Remain, where just 1 per cent expect an improvement in their finances following EU withdrawal. And among Leave voters, 22 per cent expect to see an improvement in their household finances after leaving, compared with 7 per cent who expect a decline.

So here’s what could actually happen.

What changes on Friday?

Very little. There may be debates about light displays and commemorative coins and Big Ben bongs but actually there will be very little direct change to your personal finances after we formally leave the EU at 11pm on Friday night.

After Friday we are still in a transitional period that will last until the end of the year, unless the government and the EU agree a new deal before then (which is generally seen as quite unlikely).

So that means that, until the end of the year, all the EU rules and standards that currently protect British consumers will continue as before.

What happens after that will depend on the agreement thrashed out between the UK government and the EU.

Of course, that doesn’t mean that the ups and downs of the Brexit negotiations won’t have an impact on your finances in the meantime.

Could we be heading for a crash?

The threat of a no-deal, cliff-edge EU withdrawal seems to have retreated, calming the market reaction to every move of the negotiations. However, sentiment still affects business investments, employment numbers and the wider economy – ultimately impacting everything from house prices to interest rates.

So if the next phase of negotiations appears to go badly, there could still be a significant impact on the economy and therefore on the pounds in your pocket.

And Brexit isn’t the only issue that can have an impact on sentiment. A survey by trade finance provider Stenn shows that 46 per cent of UK firms and 45 per cent of US businesses predict their country will go into recession in 2020.

Now is a good time to learn to budget, pay down any debt and build a savings plan so that your finances are braced for whatever the next few months have in store – good or bad.

Even knowing that very little changes for your finances from Friday night, many of us still have questions about passports, house prices, savings and more.

So here’s a rundown of what may change and what will not.

What about my Ehic?

If you’re planning to travel within the European Union this year then it’s important to have a European Health Insurance Card (Ehic) as this allows you to access state-provided healthcare under the same terms as locals.

Even with travel insurance, this is an important card to have and it is entirely free, you can apply online. Your Ehic will still be valid during this transition period. After that, it will depend on the new agreement the UK Government strikes with the EU.

What about my mobile roaming costs?

Under the EU’s roaming rules, UK travellers in other EU countries have been able to use their phones as if they were at home, rather than paying extra high roaming charges.

That remains the case until the end of the year but after that mobile providers could decide to reintroduce high roaming costs for UK customers.

Some mobile providers have said they intend to try to preserve the current status quo but they will need to negotiate access with European operators. From next year it will be sensible to check your provider’s position before using your mobile when travelling across the EU.

What about my holiday?

If you’re planning a holiday within the EU this year then don’t fret, nothing should change.

In the 2020 transition period at least, there’s no new need for visas or extra documentation. After that, it’s enormously unlikely that British people would struggle to travel to the EU for holidays or on work trips, although there may be extra paperwork depending on what the government agrees.

One thing worth considering is travel money. If the value of the pound reacts to the future deal negotiations then you might find the value of the travel money you can afford fluctuates wildly.

You may be better off buying some of your travel money in advance and some as you get closer to your holiday, shielding you against any drops in the value of the pound.

What about my passport?

You may have seen the new blue passports but they will not immediately become compulsory. There’s no need to pay to upgrade yours sooner, just get it replaced when your old passport approaches its expiry date.

One tip, it’s sensible to renew a passport while it has more than six months of validity left anyway. Some countries do not allow people to enter if they have less than six months left on their passport.

That’s not currently an issue for EU countries. However, the current government advice is that this might cause problems getting into the EU in the event there was a no-deal Brexit, so it’s worth renewing yours sooner rather than later just to be certain.

What about my house price?

Before the referendum (remember that?) there were some pretty stark warnings about what Brexit might mean for the value of the UK’s housing stock and some homeowners will be worrying about that.

The housing market has been fairly sluggish since the Brexit referendum but it has picked up in recent weeks.

No one has a crystal ball and the housing market does react to the wider economic picture. However, Rightmove recently predicted house prices could rise by 2 per cent across 2020 although different regions have different outlooks.

What about interest rates?

There had been speculation that the Bank of England might cut the base rate in the near future, which could reduce the cost of mortgages and other borrowing but also negatively affect rates on savings.

However, there has been an uptick in economic signs in recent weeks, showing positive business sentiment and employment figures.

No one can know for sure what the bank's committee will decide but it’s worth remembering that they do still have scope to reduce base rate to less than the current 0.75 per cent if Brexit negotiations do start to cause economic pain.