The heat is on

The information provided in this article was accurate at the time of publishing and should be read in the context of the date it was published. Views in this article are those of the author alone and do not necessarily represent the view of Scottish Friendly.

It’s now one year since Britain voted to Brexit and outside the temperature is sizzling. But it’s the financial heat that’s making many people across the UK feel particularly uncomfortable.

The Prime Minister served the EU divorce papers in March this year and this week formal decree nisi negotiations began. The decree absolute could be, should be, 2019 but a softer Brexit may involve a longer lead time before full formal separation.

Who knows if Britain will be economically better off after the divorce but at present, things are tight for Brits and seem set to remain so over the months to come.

This has been confirmed by Bank of England Governor Mark Carney who’s said that the sustained fall in sterling following the Brexit vote has exacerbated inflation. However as wages haven’t grown to keep pace with inflation, individuals and families simply don’t have enough money to sustain the standard of living they had before Brexit.

As we at Scottish Friendly have consistently reported over the last year in our quarterly Disposable Income Index, families are feeling the squeeze. Our second Index of 2017 is due at the end of the month and we fully expect to report the squeeze on household finance continues.

For borrowers, the good news for the time being is that Mr Carney, despite rising inflation, says now is not the time for interest rates to increase. For hard-pressed savers, however, continuing record-low interest rates is not the news they’d like to hear.

So the heat is on and if we want to escape it over the months ahead, we’re going to have to be as resourceful as possible in how we spend our money in order to keep ahead of inflation. The danger of not doing so is that we’ll end up dipping into our savings and investments or, worse, taking on credit to finance our spending.

No advice has been provided by Scottish Friendly. If you are in any doubt as to whether a savings or investment plan is suitable for you, you should contact a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting Advisers may charge for providing such advice and should confirm any cost beforehand.