The Brexit Effects On Investments And Savings

- by Becky Hall
brexit effects on investments

Brexit Uncertainty Damages Investments

The average family in the UK has very few investments and so may feel that financially they will not feel the Brexit effects on investments. However, this is not always the case. Everyone who pays into a pension and has a mortgage or pays rent will feel the effects of this momentous decision to split from the EU.

The one thing that the markets hate is uncertainty and ever since the UK voted to leave the EU the markets have been volatile, to say the least. The markets reflect the fear and uncertainty that the future holds for the economy of UK. Cashfloat, a payday loan direct lender looks at the Brexit effects on investments and savings.

Will Companies Continue to Invest in the UK?

Since the referendum, there has been a lack of investment in the UK due to the uncertainty that surrounds Brexit. It also reflects on companies either putting plans on hold or choosing to invest in other European countries. There have already been some instances of backtracking from big business who are waiting to see which direction the UK will take on trade agreements.

Companies that do decide to move to the continent may take some staff with them, but undoubtedly there will be many people who will be made redundant. This will have a knock-on effect on the stock market, and the value of investments will fall as a result of reduced access to the single market and possible tariffs on trade.

How Does Brexit Affect Private Investments and Savings?

You may be affected by Brexit if you have investments, such as:

  • Mortgage
  • Pension
  • Savings Accounts

Brexit and Pensions

Everyone who pays into a pension could be affected by the value of investments. So, even though you may not have a portfolio of stocks, shares and savings, Brexit could have an impact on how much you eventually get when your retirement date arrives. This will affect those who are nearly at retirement age more than those who have some years to go.

The value of sterling has dropped like a rock since the vote. This could also affect companies in which your pension fund is invested. Those who can afford to do so are moving their money into gold and fixed income bonds but for the ordinary man in the street, the future of investments looks uncertain and even fearful.

Brexit Effects on Investments and Interest Rates

All private pension funds are invested in the stock market, and while most pension companies make sure that the funds are spread out between investments that are safer and those that will bring in higher rewards, the funds are still exposed to risk.

The lower the interest rate the worse it is for those people with pension funds. The state pensions are protected under the triple lock scheme, so if interest rates do rise and cause an increase in inflation, this will because an increase in the amount of state pension paid.

£74.22 billion is spent on state pensions - cashfloat explores how pension and investments will be affected by Brexit

ISA Investments and Brexit

As soon as the result of the EU referendum was in, some of the investment funds that are popular with ISA investors took a hit with a few falling by as much as 5% in value. Of course, those ISA investments with funds based in places like Taiwan and India saw a rise in value. Funds placed in the US also saw an increase when sterling started its dramatic fall against the dollar.

The managers of such funds are split over how they think the outcome will be. With the government dithering to sort out a Brexit plan, the uncertain markets look set to be with us for some time to come.

As the world economy is still under the influence of slow growth and commodity prices remain weak, no one can say whether this whole escapade will cause a recession in the UK. However, there is no doubt that the Brexit effects on investments are going to be felt all over Europe and the world and not just in the UK.

Brexit and the Value of Pension Funds

As young people have a much longer period of saving, older people who are almost ready to retire need to know how much they will get and after the result of the vote this could be considerably less than they were planning for.

When many companies decided to end the final salary pensions and opted to provide a defined contribution scheme, this meant that when investments fell so did the value of the pension pot and this affects how much each retiree will get paid every month.

The financial instability created by Brexit means that future private pensions are going to be worth less. Thus many pensioners could find themselves living off a much lower income than they envisaged. If pensioners find that their stipend is not enough to cover monthly costs, they may turn to short term loans with easy repayment to help them get through the month. Some savvy pension fund managers did remove funds from the UK markets before the vote as they were concerned about the impact of Brexit effects on investments if the UK chose to leave.

Buying a Pension Annuity After Brexit

If the value of stocks has not depleted your pension fund too much and interest rates do rise then buying an annuity could be good value in the future. However, since most annuity rates do not pay out great sums a better option could be choosing a fixed income bond to top up a state pension. The only problem with this would be if inflation started to rise and the payment would remain the same throughout the duration of the bond.

Brexit Oppotunities

No one knows what the outcome of Brexit will be and the future may hold price rises, government policy changes to pensions and a volatile stock market for some time to come.

While we have already seen the impact of Brexit on sterling, there may yet be more nasty surprises for stocks and shares that are going to affect all of us with any savings at all. Until the dust settles over Brexit, people in the UK are going to feel the impact of Brexit effects on investments in their pockets both now and when they retire.

Do you know someone who could benefit from this article?
About The Author
Becky Hall
Becky transitioned from accounting to financial blogging unexpectedly after earning a first-class degree in Business and Accounting. Initially a freelance bookkeeper, Becky’s exposure to frequent cash flow issues among clients sparked her interest in financial education.
We work hard to provide useful and practical information on our website. Read our editorial policy.
Need £300 - £1,500 today?
Try our famous UK Payday Loans

Warning: Late repayment can cause you serious money problems. For help, go to

Need money today? Apply now for our fast payday loans.
Blog disclaimer

We do all we can to bring you interesting, practical and valuable information. However, please understand the following:

Information and data on this blog are for information purposes only. While we work hard to ensure it is accurate, we cannot accept responsibility for the accuracy, completeness, suitability or validity of any information provided on the blog. We will not be liable for any errors, omissions, losses, injuries or damages arising from its display or use. All information is provided with no warranties and confers no rights.

If you feel that any of the information published on our blog is not accurate, please notify us via email at

Cashfloat is a trading style of Western Circle Limited - Company Registration Number: 7581337. We are fully authorised and regulated by The Financial Conduct Authority. FCA full permission license: 714479. ICO Registration Number: Z3305234

* Cashfloat terms and conditions apply. Applicants must be 18 or over. All loans are subject to affordability, applicant verification and traditional credit checks via various national databases by Cashfloat responsible lending policy. In most cases, loan decisions may take up to 30 minutes during office working hours. If your bank does not support Faster Payments, funds will be sent to your account the same day as approval so long as you’re approved by 16:30.

*Money will be funded to your bank within 1 hour of approval - Mon-Fri during working hours.

Representative example: Borrow £700 for 6 months. 1st monthly repayment of £168.45, 4 monthly repayments of £224.60, last monthly repayment of £112.20. Total repayment £1,179.05. Interest rate p.a. (fixed) 185.39%. Representative APR 611.74% Our APR includes all applicable fees. Daily interest is capped at 0.798%.

Warning: Late repayment can cause you serious money problems. For help, go to