The pros and cons of Brexit for your pocket

Cheaper British imports and tumbling pension values are among potential repercussions

 

We would like to be able to say the dust has now settled on the Brexit vote and everything has returned to normal. But it hasn’t and it probably won’t for quite some time – if, indeed, it ever does. But with the passage of time, clearer pictures always emerge, and now might be as good a time as any to leave aside all the political and economic shenanigans and the big-picture stuff and see what it might mean for Irish consumers.

As with most things, there are reasons to be cheerful and reasons to be glum.

1 This time last year £1 was worth about €1.45. This time last week £1 was worth about €1.17. Is it any wonder that UK-based online outlets such as Asos, which prices all it sells in sterling, struggled to cope with demand in the wake of Brexit as canny consumers from the euro zone sought out bargain buys.

It wasn’t just the online world that saw a dramatic shift. Almost overnight cross-border shopping became significantly more attractive – at least for people living within striking distance of the Border. And if sterling continues to weaken, the allure of cheaper goods in the North will widen. “It could be that we see Irish shoppers return to old habits,” says Georgieann Harrington, insight director at Kantar Worldpanel. “During the recession many headed across the Border in search of better value at UK retailers in Northern Ireland. Cross-border shopping accounted for only 0.3 per cent of Irish grocery sales in the latest 12-week period, but at the peak of the recession this stood at 4.1 per cent.”

This might be good news (at least in the short term) for consumers, but it is bad for retailers and for the tax take, which ultimately makes it bad news for everyone.

2 Last week the Department of Finance warned that VAT on the sale of goods is likely to fall in the months ahead. “We would expect, later on in the year, and again it depends on the strength of sterling, that we will probably see some linkage across to Northern Ireland in terms of VAT, and people [will] go and shop there,” a spokesman at the department said.

3 The cost of goods imported into the Republic from our nearest neighbour will fall if sterling stays weak. Cheaper prices may or may not be passed on to consumers – if past evidence is anything to go by, it will be passed on to some degree but not by as much as it should be. While savings on imports from the UK will be welcomed by many, lower-cost imports will make things considerably tougher for Irish brands doing business here and there.

4 For the best part of 100 years, people in Ireland and Britain have been able to travel between the two islands without the need for any documentation. That free movement could come to a shuddering halt if the wishes of many Leave voters come to pass. One of the key reasons many UK voters opted to leave the EU was fears over immigration. While Leave voters may not have had Irish people in mind when expressing themselves at the ballot box, if they want to curb immigration they are going to have to set up border controls. And since the Republic of Ireland is the only place – apart from Spain, with Gibraltar – that shares a land border with the UK, consumers in this part of the world will probably be hit hardest by the changes.

5 Irish people who have the misfortune to fall ill in the UK could also feel the sting of Brexit. Under EU rules, all Irish citizens can take advantage of the NHS once they have a European Health Insurance Card (Ehic). If and when Brexit happens, that could change, and we could be treated as international travellers and be expected to pay for our healthcare (which might help us feel like we’re at home).

6 Few consumers will feel the negative impact of Brexit more than those who are approaching retirement right now. Irish pension funds are worth more than €110 billion, and about a quarter of all the cash has been invested in UK and EU stock markets, which have taken a hammering over recent weeks. Market peaks and troughs are inevitable, and share prices will climb again, but a sustained slump will still take thousands out of many Irish people’s pension pots. It would be wrong to overstate the carnage, however, as most people who are very close to retirement will have their pension pots invested in cash and government bonds, which have not been hit so hard.

7 While there will be no overnight changes, the UK’s exit from the EU could see Irish citizens struggling to relocate to our closest neighbour. It seems unlikely that Irish citizens currently in the UK will be affected (not even the most hard-line of Tory Leavers could seriously think deporting millions of EU citizens would be a good idea). But in the future, people may find the roads leading to London (and Manchester, Swansea, Liverpool and – whisper it – Newry) considerably harder to settle in.

8 On the plus side, the vote could see the Republic become an infinitely more attractive base for multinationals and financial houses with large suitcases of cash to spend. And what could they not love about us? We have an educated, English-speaking population, an economy that is doing well (fingers crossed) and we will remain members of one of the world’s most powerful trading blocs. And Dublin is less than an hour’s flight from London.

9 Earlier this month the European Consumer Centre in Ireland issued an alarming statement in which it reminded consumers that their rights under EU legislation had not changed because of the UK decision to leave the European Union.

It was alarming because the centre felt it necessary to issue the warning after it received “worrying reports that some UK-based traders have refused to refund Irish online consumers, citing the outcome of the Brexit referendum on June 23rd as the reason.

It cited the example of one Irish consumer who bought a dress from a UK-based trader that did not fit properly. The woman then contacted the trader to exercise her right under EU law for a 14 calendar-day “cooling-off” period, under which a consumer does not have to give any reason to return the goods and seek a full refund. The trader refused to give the refund on the basis that Britain was leaving the EU and that EU consumer law would no longer apply.

“ECC Ireland would like to remind consumers that they have the same EU consumer rights today as they did before the UK referendum and traders should not be using Brexit as a reason for not giving legitimate refunds, repairs or replacements, delivery of an item, or carrying out other customer-relation services,” its communications officer, Martina Nee, said. “Do not let Brexit be used as an attempt to deter you from availing of your consumer rights. It’s business as usual until further notice.”

10 At the end of April the cost of mobile phone roaming fell, as an EU- imposed charging cap came into effect ahead of a full ban next year. The cap means operators can’t charge us more than five cent a minute for voice calls, two cent for text messages and five cent per megabyte of data. The rule, of course, only applies when roaming with the EU. If the UK were to leave the EU then suddenly making calls, sending texts or mindlessly scanning Facebook while doing your cross-border shopping in Newry could end up costing a pretty penny.

11 European legislation gives air passengers stranded or otherwise hung out to dry significant protection. Under EU regulation 261, airlines must offer passengers affected by cancellations a full refund or a rerouting on the next available flight or at a later time that suits the passenger. If a passenger opts for a refund, the airline’s responsibility ends there. If they ask to be put on the next available flight, the airline must provide care and assistance until the affected passenger can be flown out. While the UK would probably introduce similar legislation for passengers using its airports, probably is not definitely.

12 A British exit from the EU could lead to a British exit from the single European payments area (Sepa), which put manners on banks that used to charge ridiculous fees for transferring money from one European account to another. It made electronic transfers across all Sepa states cheaper and faster and gave consumers greater control over their finances than ever before. It would be a shame if people moving money to and from the UK were to lose all the benefits all of a sudden.

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