Sarah Coles, head of personal finance at AJ Bell, comments: “The impact of Brexit in the 10 years since the referendum is hard to untangle from everything else that has been going on over the past decade. We’ve faced a global pandemic, runaway inflation prompted by war, and a bond crisis precipitated by a disastrous mini-Budget. However, there are some aspects of our finances that were clearly impacted by the vote to leave Europe.
1. The pound fell – making travel pricier
“Immediately after the vote, the pound saw its biggest single day drop for 30 years. Traders sold out of sterling, worried about a period of uncertainty and instability, plus the economic impact of making trading with Europe more difficult. There were subsequent falls after the 2017 general election and after Boris Johnson became prime minister in 2019, raising the possibility of a ‘no-deal’ Brexit.
“The pound also started to drop ahead of the vote itself, as traders anticipated the impact. Back in November 2015 a pound was worth 1.42 euros, and by August 2019 it fell as low as 1.09. It has remained volatile since and on 11 June 2026 was trading at 1.16 euros.
“This has been making holidays more expensive in some popular destinations ever since, because not only does your holiday money not go as far, but the exchange rate also makes anything priced in euros or dollars more expensive, which can include everything from the hotel to the flights or dinners out.”
2. The falling pound fed into inflation
“When the pound falls, it makes things more expensive to import. It has been estimated that this increased consumer prices by 2.9% at the time of the vote. This was exacerbated by the additional friction on imports, and the associated costs.
“As a result, inflation rose in the aftermath of the Brexit vote. In June 2016 it was at just 0.5%, hitting 1.6% by December the same year and then 2.6% in the following June. By December 2017 it had hit 3%, before gradually decreasing again. Of course, in the years following the pandemic, the financial support pumped into the economy combined with the impact of the war in Ukraine meant inflation of a completely different order.”
3. Staff shortages pushed prices higher
“There’s also been the inflationary impact of higher staff costs. The new points-based immigration system makes it more difficult for UK firms to recruit from the EU. People wanting to work in the UK have to meet new standards, ranging from wages to language skills. Those industries that typically employed a large number of EU workers – like care and haulage – have found it more difficult to replace them. A smaller workforce in these areas has put pressure on wages, which in turn fed through into higher prices.”
4. Sluggish growth meant lower interest rates – hitting savers
“Interest rates were already at just 0.5% at the time of the vote, as the world was still reeling from the after-effects of the financial crisis. However, they dropped in the summer to 0.25% and remained there for over a year, as the country struggled with modest growth and a slowdown in spending. The resurgence of inflation prompted rates to rise to 0.75% before the Covid cut in 2020 to 0.1%. From this point onwards, the economic distortions of the pandemic dominated movements.
“For anyone relying on savings to produce an income, there was more than a decade of misery between 2008 and 2022, when rock bottom savings rates produced derisory sums. Things have picked up significantly over the past four years, when savings have been more rewarding. However, it was a salient demonstration for anyone using assets to produce an income how much more rewarding investing can be over the long term, and how key it is to consider investments as part of a portfolio.”
5. It helped push more people towards fixed rate mortgages
“Years of lower rates mean we have seen the rise and rise of fixed rate mortgage deals, as people locked in lower rates. In 2016, fixed deals accounted for around 90% of all new mortgages and by 2022 it reached 97%. It means there’s a far longer lag between the Bank of England raising rates and it hitting our finances. On the plus side, short-term ups and downs have less of an impact. On the downside, when we have significant rate hikes over time – as we did in 2022 and 2023, the pain is felt in one fell swoop at the time of a remortgage, so it’s vital to plan effectively for the jump in expenses.”
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