Following the UK referendum decision to leave the EU, many in Ireland are asking what it means for their finances. While much depends on what new agreements are negotiated between the EU and the UK, Irish investors, pensioners and consumers are already feeling the impact. We look at how Brexit affects you.
Investors were among the hardest hit by the Brexit vote, with billions of euros wiped off the value of shares and pension funds.
The Iseq plummeted by 18% in the two days following the vote, although it has since recovered some of those losses.
Experts say investors should ignore the turmoil and take a long-term view.
Barry Kerr of Wealthwise Financial Planning said: “Long-term investors should not panic. They should be patient and remain invested, sticking to the mantra ‘it’s about time in the markets, not timing the markets'.”
Marc Westlake of Portfoliometrix in Dublin said the sell-off highlighted the need for investors to be diversified. “People who have a competent plan and a diversified portfolio are fine and have absolutely nothing to worry about," he said. “People reacting now are too late."
Traders and holders of individual Irish shares should expect Brexit to result in downward pressure on valuations. Describing Brexit as “the UK's Lehman Brothers moment", David Holohan, head of research at Merrion Stockbrokers, said Irish companies with heavy UK exposure were most at risk. “Ryanair and Bank of Ireland have significant operations in the UK so you would expect these to suffer," he said, “On the construction side, Kingspan remains quite exposed with about a third of its business in the UK.”
Holohan said DCC, Glanbia, Kerry and Fyffes should suffer least from Brexit.
Investors in UK property may see values fall, with KPMG predicting British house prices will drop 5% in 2017 and 2018.
Experts say investment opportunities arising from Brexit include gold, which is seen as a safe haven in times of turmoil. “Gold has done quite well and looks like it can continue to build on recent gains,” said Holohan. He also expects money to flow into US equities.
Irish residents receiving a British state pension, or a UK private pension, are significantly poorer from Brexit.
This is because of the collapse in the value of the pound against the euro. Sterling slumped more than 7% against the euro in the wake of the Brexit vote and is down 17% over the past year.
About 135,000 people in Ireland receive a British state pension, according to the Department of Social Protection (DSP). In total, there may be 180,000 people who receive public or private UK pension income, say experts.
According to the DSP, it is not possible to exchange a UK state pension for an Irish one to eliminate currency risk. Jerry Moriarty, chief executive of the Irish Association of Pension Funds, said: “There’s not much people can do about the slide in sterling. If you're in receipt of a small state pension from the UK, you're not going to be in a position to hedge against currency movements."
Irish people who have worked in the UK can count British social insurance contributions towards an Irish pension, he said.
“If you're not in receipt of the UK state pension, live in Ireland and haven't yet retired, you can get your UK contributions to count towards getting an Irish state pension. This would take out the currency risk if you are going to remain in Ireland."
The slide in sterling benefits shoppers. Owen McFeely, retail and consumer senior manager at PwC Ireland, said: "Cross Border shopping has become more attractive for those living in border counties and potentially further afield if the currency gap continues to grow."
Households may benefit from lower energy prices. Simon Moynihan of price comparison site Bonkers.ie said: “Whole sale gas and electricity prices are purchased in sterling, so there could be some downward energy prices in Ireland."
Irish people buying online from UK traders or travelling on British airlines could lose the EU consumer rights protection as a result of the Brexit vote.
For now, these rights remain inforce. Martina Nee of the European Consumer Centre Ireland (ECCI), which assists consumers involved in EU cross-border disputes, said: “Your rights under EU legislation haven't changed because of the UK decision to leave the EU. You have the same EU consumer rights today as you did before the referendum.”
She warned that UK traders may use Brexit as an excuse to shirk their obligations under EU consumer law.
For example, under EU rules, Irish consumers who shop online from UK-based traders have the right to a 14-day cooling-off period, which allows them to change their minds and send back the goods for a refund.
The ECCI said it had received reports of UK-based traders refusing to refund Irish online consumers, using Brexit as an excuse. “Do not let Brexit be used as an attempt to deter you from using your consumer rights,” said Nee. “It’s business as usual until further notice."
Travellers flying to and from the UK are also protected by important EU rights. Passengers whose flights are cancelled, delayed or overbooked are protected by EU rules which may entitle them to compensation. The rules apply to passengers on EU-registered airlines or non-EU airlines flying out from EU airports.
It is possible that Brexit will result in European consumers flying out of the UK on non-EU airlines losing these rights.
Experts believe this is unlikely. Adeline Noorderhaven, UK manager of EUclaim, which helps consumers claim compensation from airlines for delayed or cancelled flights, said: “Airlines were quick to react after the referendum and stated that they would like aviation treaties to be respected, most importantly the Open Skies agreement that allows free movement of flights. If Britain is able to negotiate that the Open Skies agreement stays in place, Brussels will ensure that other transport regulations, including air passenger rights, are respected as well,” she said.
The European Health Insurance Card (EHIC) gives. Irish travellers on a temporary stay in the UK and other EU countries the right to public hospital treatment at a reduced cost or for free. With the Brexit vote, there will be no immediate change, but there is no guarantee that the EHIC will continue to be valid when the UK leaves the EU, EHIC is valid in other non-EU countries such as Norway, Iceland and Switzerland.
A healthcare benefit possibly at greater risk from Brexit is the EU's Cross Border Healthcare Directive. It entitles EU citizens to claim public hospital treatment in the UK or another EU country, and pass the bill to their home country's health service.
"Cross-border services and health co-operation between the UK and Ireland will not be affected in the immediate term,” said a spokesman for the Department of Health.
Given the “leave” campaign's claims that EU membership was a burden on the NHS, the directive could ultimately be lost.