So, finally, just before Christmas and at the 11th hour, Britain agreed to a trade deal with the European Union (EU). The news of a deal was welcomed by Brunsdon Financial’s Investment Managers, Brooks Macdonald, from where Mark Shields commented that although it was a “Skinny deal”, it was a lot better than the hard Brexit that many had predicted – and some feared.
The fine details are contained within a more than 1,200-page document that was published on Boxing Day. Commentators are still poring over it, but some consequences have already been felt in parts of the UK – for example, at the time of writing (January 2021) food shortages have been reported in Northern Ireland supermarkets as suppliers grapple with new customs regulations.
Whatever your view on Brexit, from 1 January 2021 the UK is no longer an EU member state. But what does this mean for the ordinary man and woman on the street?
The impact of Brexit on investments is difficult to determine because there is so much else going on in the world at the moment – not least a global pandemic. Arguably, at the beginning of 2020 many people would have predicted that Brexit would cause the most volatility in the markets. However, now it is difficult to tease out the effect of Brexit from the global pandemic, turmoil in the USA and EU and Chinese foreign policy! When recently questioned on this subject by our Chairman, Brian Morman, Mark Shields commented that the response of the markets to Brexit seemed so far to be “Fairly muted” and that the TM Brunsdon Cautious Growth Fund and TM Brunsdon Adventurous Growth Fund had “had a decent start to the year.” It seems clear that the certainty provided in having a deal is better for the markets than the uncertainty of not having one.
The good news is that as a result of the trade deal, there will be no tariffs applied to goods coming into the UK from the EU or to those transported from the UK to the EU. This means that prices in the shops should not be materially affected. However, additional border checks and paperwork will need to be navigated by suppliers, which could result in delays in delivery – as witnessed in the Northern Ireland example cited above. The situation with regard to services traded between the UK and EU is yet to be clarified.
Additional customs duties will have to be paid on any goods coming into the UK from the EU valued at more than £390. This will apply to goods that are physically brought back into the UK, for example items bought on a European holiday or shopping trip, or ordered online. Other fees, for example VAT and handling charges, may also be applied to some items. This could mean the Post Office holding onto items until all duties and fees have been paid.
Be aware too of the new travel restrictions that apply to UK citizens wishing to travel to the EU. You won’t anymore be able to go through the fast-track ‘EU citizens’ customs channel and will have to have at least six months life remaining on your passport, which can’t be more than ten years old. In addition, there are limits to the length of time you can spend on the continent. For most countries you can only stay for 90 days in any 180-day period. This may impact you if you have a second or holiday home in an EU country.
If you have an EHIC (European Health Insurance Card) you can continue to benefit from state-provided healthcare during a temporary stay in an EU country until your card expires. After that, or if you don’t have an EHIC, you will be eligible to apply for a new GHIC (Global Health Insurance Card). Details on the GHIC are a little sketchy at the moment, but we would always recommend that you obtain additional private travel insurance to ensure all risks are covered – for example, flights home if you fall ill or worse; non-medical cover for loss of baggage, etc.
If you are planning to drive in an EU country you will need to obtain a Green Card from your insurers. This can take several weeks, so you’ll need to plan ahead. You will also have to make sure you have a ‘GB’ sticker on your car rear bumper. There are additional regulations in place should you wish to take your pet(s) with you on your trip.
Finally, you will need to be wary of incurring higher charges for the use of your mobile phone in the EU. You will be aware that since 2017 UK visitors have been able to use their phones in the EU without incurring additional roaming charges. Now that we have left the EU, this may no longer apply. It’s true that the major UK operators have all said that they don’t have any current plans to reintroduce roaming charges. But they could if they wanted to, so it’s wise to keep an eagle eye.
It’s still very early days and so it’s too soon to tell what the effects of Brexit will ultimately be – both as a country and as individuals. However, after more than 40 years of being in the European ‘club’, there is no doubt that there will be effects. Prior to Brexit – and depending on which side of the fence you sat – opinions on what these effects would be ranged between the two extremes of devastating and wonderful. Only time will tell which proves to be the most accurate.
Whatever the future brings, please do get in touch with your Brunsdon Financial Adviser if you need any advice or are concerned about your wealth management or retirement plans – whether as a result of Brexit or for any other reason.
In the meantime, you can view Brian Morman’s conversation with Mark Shields over on our You Tube channel.
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