Could Brexit Already Be Harming Contractor Incomes?
3 minute read
It’s still very early days following the shock vote to leave the EU, and as yet there’s still very little to go on to draw any firm conclusions about how the economy will be affected. However, with a little help from our experts, we have dug a little deeper to discover how ‘Brexit’ could already be harming contractor incomes.
We’re dealing with uncertainties
Currently, the picture remains very unclear. No terms have been set as to how and when the UK’s exit from the EU will take place, yet this uncertainty has already been enough to impact on the incomes of some UK contractors. Inevitably, some businesses will choose to move away from the UK as a result of the decision. However, as yet, most remain undecided – biding their time to see how the economic picture will change. As a result, major investment decisions are likely to be put on hold, and this could impact the incomes of contractors. There’s also the likelihood that some hiring decisions will be delayed until the situation becomes clearer, potentially denting incomes further.
EU contractors could be hit the hardest
There are currently a considerable number of UK contractors working in EU countries who could find their incomes affected in a number of ways. Initially, the devaluation of the pound could be good for contractors who are paid in the local currency as their earnings will effectively increase. However, fluctuations in the pound make it difficult to predict how this will change over the coming months. Some UK contractors working in the EU are also likely to start looking to return home given the uncertainty about whether visas will be required to work abroad in the future. This could increase the competition for contractor jobs in the UK and possibly harm the incomes of some.
The effect on mortgages, insurance and investments
Mortgages – At the moment, any interest rate rise that was on the cards has been postponed, with the record-low rates that have been in place since 2009 continuing for at least another month. However, any increase to SWAP rates will be pushed through to 2, 3 and 5-year fixed deals, so it’s well worth contractors keeping an eye on the mortgage market and securing their next contractor mortgage deal while the rates remain low. Insurance – Companies in the insurance sector tend to have considerable equity holdings, and poor performance of investment portfolios during the 2008 credit crunch was purported to have had an impact on the cost of living and other protection policies. However, the FTSE has bounced to an 11-month high following an initial crash, so it could be worth shopping around for insurance policies now before any fall in the FTSE has an impact on their price. Investments – Despite the historic leave vote, the fundamentals of investment still hold true. Investments are a long-term game, so any short-term gains or losses should be taken with a pinch of salt and should not impact on your investment strategy. If you are concerned about how the Brexit decision could impact your investments, you should seek advice from a qualified professional.
What do you think?
Has the decision to leave the EU had any impact on your contractor income as yet, whether positive or negative? Share your thoughts in the comments section below.