Brexit: UK Households Worried about Hit to Family Finances

New survey shows almost half of households are concerned Brexit vote will reduce their disposable income

Emma Simon 13 June, 2016 | 1:39PM
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More than half of all UK households (51%) are anxious about the outcome of the forthcoming referendum - with 45% saying they’re concerned they will be worse off financially if Britain leaves the EU.  

Despite British households reporting a slight increase in their disposable income in the last three months, most remain pessimistic about their financial prospects over the next year. Many say they are anxious about external economic shocks affecting their day-to-day finances.

These results are part of the latest Disposable Income Index (DII) published by Scottish Friendly, the savings and ISA provider, in conjunction with the think tank, the Social Market Foundation.

It found that British households were on average £95 a month better off over the last quarter. The average household now has a disposable income of £1,000 (up from £905) once essential bills have been deducted from their monthly income.

This increase has been attributed to continued low rates of inflation, the introduction of the National Living Wage and moderate pay growth across the private sector.

Will Brexit Push Up Prices?

But this financial improvement has not been matched with any corresponding boost to financial confidence. Only a third of households (34%) say they will be better off financially in 12 months’ time, and a quarter believe things will get worse for them.

Many households said they continued to be concerned about how they would meet unexpected bills - for example broken down cars or washing machines. But it is clear the looming EU referendum is also a growing concern.

The main fears cited were that Brexit could cause prices to rise in the shops (mentioned by 40.3% of respondents), it could lead to job losses (28.6%), or changes in the labour market – for example a reduction in paid holiday or maternity pays (19.1%).

Financial Uncertainties

It isn’t just household finances that are affected by the uncertainty surrounding the Brexit vote. At mid-day on Monday Brexit worries had driven the pound to an eight-week low against the dollar. At the same time the FTSE 100 slid to its lowest level for over three weeks.

Calum Bennie, a savings expert at Scottish Friendly said: “Uncertainty caused by the forthcoming EU referendum is leaving many families feeling anxious. The possibility that prices may rise or jobs could be lost are clearly important points affecting many people when they are considering the impact of the EU referendum on the pound in their pocket.”

He added: “It is encouraging to see the median level of disposable income increased over the last three months. The introduction of the National Living Wage and moderate private sector wage growth has helped certain sections of society to have more money in their pocket at the end of the month.

“However, our study continues to suggest that people are feeling financially fragile. Worries preside about unexpected bills and debt. Not enough households are in a position to save at the end of the month at that continues to be a concern.”

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About Author

Emma Simon

Emma Simon  is a financial journalist, specialising in investment and consumer issues, writing for Morningstar.co.uk