The turbulence surrounding Brexit could also lead to turbulence around your bank balance. Find out why and what you can do about it. Brexit is looming – whether you want it or not. A prominent question on everybody’s minds is: ‘is my money safe?’ Here we discuss how much impact Brexit could have on the UK economy and whether it is worth protecting your bank balance ahead of it.
Is Brexit losing money for the economy?
In January 2019, the Bank of England (BoE) warned that Britain’s large current account deficit remained a big risk ahead of Brexit. Bank of England Governor, Mark Carney, has noted in the past that Britain’s current deficit – the biggest of any major economy – hinges on providing a predictable business environment.
Alex Brazier, BoE’s executive director, has also commented on how 60% of inflows of foreign capital stems from British commercial real estate and leveraged loans issued by companies who already have a high level of debt. He continued to suggest that if Britain were to be affected by new trade barriers it would not be able to sustain its existing current account deficit. Naturally, this would lead to a much weaker economy and by default the pound would also fall in value. However, Brazier also commented on how the UK has a mechanism that could help mitigate against this – a flexible exchange rate.
What regulations are in place to stop Brexit losing money from your bank balance?
Brexit may present uncertainty about the future – but that does not mean there aren’t regulations already in place in the event of unforeseen circumstances. For example, all UK-regulated current or savings accounts, cash ISAs stored in banks, building societies and credit unions are covered by the Financial Services Compensation Scheme (FSCS). The FSCS applies to organisations who are regulated by the Financial Conduct Authority (FCA). The limit was previously £75,000, but in January 2017 it was increased to £85,000. This does not mean that you will receive £85,000 per account, however. It is £85,000 per person, per financial institution.