what does Brexit mean for the UK

21 Brexit need-to-knows

Incl house prices, visas, flights, consumer rights & more

The UK left the European Union at 11pm on Friday 31 January. While very little has changed for now, it's a once-in-a-generation event that will have far-reaching implications for everyone in the UK, their finances and their consumer rights. Here we tell you in plain English what it means for you – plus give you MSE founder Martin Lewis's view.

What happens now we've left the EU?

Unless you've been living under a rock for the past three or so years, you've probably heard the term 'Brexit' and know it's shorthand for Britain's exit from the European Union.

After years of political wrangling, we left the EU on Friday 31 January. This marked the start of an 11-month 'transition period', during which the UK will continue to follow EU rules, before a final break at the end of the year.

In this time, the Government hopes to negotiate a comprehensive trade deal with the EU – and the outcome of those talks is likely to have a major impact on what Brexit means for you in 2021.

Martin: 'A big political day, not a big practical day'

MoneySavingExpert.com founder Martin Lewis said: "Friday 31 January was a big political day, but not a big practical day for UK consumers. Whether it's mortgages, savings, travel rights or more, all are simply moved to the new transitional rules – designed to provide unchanged continuity. In other words, the previous rules still stand on Saturday.

"The key change will be when the transition finishes at the year's end. What happens after that is up in the air, as it depends solely on if and what deal we get with the EU.

"Of course, in the meantime as always there will be exchange rate and market fluctuations depending on how various deal announcement updates are viewed."

  • In a landmark referendum held on 23 June 2016, those who took part voted by 52% to 48% to leave the European Union.

    While this referendum was legally only indicative (so it didn't in its own right have the force of law), it was seen as politically binding.

    However, as Martin Lewis says: "Some cared about immigration, others sovereignty, some the economy – yet the disgrace is we had a black-and-white vote on a rainbow of issues." Other than the phrase "leave the European Union", there was no definition on the ballot paper of what Brexit meant, leading to huge arguments since about how far the UK separates from the EU.

    On 29 March 2017, the Government triggered a rule known as 'Article 50', which started the UK's withdrawal from the EU. It was passed through the UK Parliament and dictated that we'd leave exactly two years later, on 29 March 2019.

    However huge political uncertainty followed, and our departure date has been delayed multiple times. After months of Parliamentary gridlock, there was a general election on 12 December 2019. It resulted in a resounding victory for the Conservatives, who had stood with the promise to "Get Brexit done" – and as a result, we left on 31 January 2020.

    We will now have a 'transition period' until the end of 2020, where we'll follow EU rules but won't be part of its decision-making processes (so we won't have any representation in the European Parliament). During this time, the UK Government plans to negotiate what our future partnership with the EU will be after the transition period ends on 31 December 2020.

What can we expect for the economy?

This was one of the most hotly debated issues at the time of the referendum – see Martin's original 'How to vote in the EU referendum' blog. Some who voted 'leave' believe it will mean new opportunities for the UK economy. Others have predicted it will lead to economic crisis.

Here's a bit more on specifics:

  1. There were dire warnings that house prices could plummet – but this hasn't happened

    After Brexit was first voted for in 2016, there were fears a house price crisis could be just around the corner. In November 2018, the Bank of England made headlines with a report warning that a 'no-deal Brexit' could lead to the economy shrinking and house prices falling by close to 30%.

    These were absolute worst-case scenario predictions though, and now we've agreed a deal and are conducting a more orderly Brexit, predictions have become more optimistic. In actual fact, before the coronavirus pandemic took hold, experts predicted a 1-3% rise this year. What Brexit will mean in the long-term is still less clear.

  2. Mortgage, loans and savings rates could, er, rise or fall

    After years of no change leading up to 2016, the Bank of England dropped the base rate – its official borrowing rate, which some mortgage and savings rates are tied to – in the wake of the EU referendum, to stave off a recession. Since then, the base rate's risen twice, and now sits at 0.75%.

    As things stand, we simply don't know what the long-term implications of Brexit will be for the economy. Clearly Brexit is likely to be one of the major factors impacting interest rates, foreign exchange rates and the strength of the UK's economic growth, all of which have knock-on effects for your job security, house prices, mortgage and savings rates and more. Yet there is no agreement on which way.

    Rather than trying to second-guess economic shifts, the safest approach may be to simply focus on your own personal finances, which are more controllable and predictable. A money makeover is a good place to start.

What does Brexit mean for travelling to the EU?

Before Brexit, UK citizens could travel, live, holiday or work anywhere in the EU without any special permits. This didn't change on Brexit Day – but there will be changes in the future.

  1. There shouldn't be any flight, coach or train disruption in the short-term

    The Government previously warned that in the event of a no-deal Brexit, flights to and from the European Union could be delayed or cancelled. And there were fears that other travel to the continent – ferries, coaches and the Eurostar – could be disrupted too.

    Now that a deal's been negotiated and a transition period agreed, everything is continuing as normal following Brexit Day.

    In the longer term, there's uncertainty over whether the UK will be able to agree a trade deal this year with the EU. But even if it struggles to, with a more orderly Brexit now in motion it seems unlikely there'll be any travel disruption come 1 January 2021, but it can't be entirely ruled out.

  2. Flight delay compensation rules won't change – EU rules have been written into UK law

    If you're on a flight to or from an EU country which – due to the airline's fault – is delayed by more than three hours or your flight is cancelled altogether, under EU rule 261/2004 you're entitled to between £110 and £540 per person in compensation. Full details on this can be found in our Flight Delays guide.

    This hasn't changed as a result of Brexit, as EU rules will continue to apply to the UK until the end of the year. But even after that, the Government insists flight delay compensation rules will remain the same, as it's written EU261 into UK law.

    We've put various scenarios under which flights would currently be covered under EU261 to the Department for Transport – such as if you flew from the US (a non-EU country) to France (an EU country) on British Airways (a British airline) – and it's adamant that with EU rules copied into UK law you'll still get the same cover you would if the UK had remained in the EU. You can read the small print here.

    It's also worth bearing in mind that if you fly between two European countries after Brexit, you'll still be covered under EU261, as the law does not require you to be an EU citizen to claim compensation.

  3. You'll be able to travel as normal to the EU this year – but from next year you'll have to buy a £6 visa-waiver for holidays

    Here again, nothing has changed immediately as a result of Brexit – during the transition period from 31 January to 31 December this year, UK nationals will be able to continue travelling to and working in the EU exactly as they do now.

    However, when the transition period ends, this will change. From early 2021 (the exact date has yet to be confirmed):

    • You'll have to buy a £6 visa-waiver for holidays and short stays. UK nationals won't need a visa for short trips to EU countries (up to 90 days in any 180-day period) if they're just going on holiday. But they will have to fork out a €7 (£6.28) fee under the EU Travel Information and Authorisation System (ETIAS).

      The fee will pay for a new electronic pass, which will allow British citizens to go on short holidays over a period of three years before they have to renew – so it's not a per-trip fee. The pass is similar to the ESTA required to visit the United States (see our ESTA guide for full info on how that works).

    • To work or study (or for trips longer than 90 days) you may need extra documents. Details of this have yet to be confirmed and it will depend on what you're doing and where you're going. You'll have to check with the embassy of the country where you plan to travel for what type of documents, if any, you will need.
  4. Passports are turning blue – but you won't have to get a new one until your current one expires

    If you've a UK passport, it'll likely be burgundy with the words 'European Union' stamped on the front.

    This will change, but you WON'T have to get a new passport straightaway, and can continue to use your current one until it expires.

    For those getting a new passport or renewing, blue passports are being phased in and will be fully rolled out from later this year.

  5. Visiting the EU this year? There's no need to renew your passport early

    Pre-Brexit, you could travel to EU countries on your passport right up to the point it expires. That will continue to be the case for this year at least, until the end of the transition period.

    However from 2021, when visiting most EU countries and Iceland, Liechtenstein, Norway and Switzerland, on the day you travel you'll need your passport to both: have at least six months left and be less than 10-years-old (even if it has six months or more left).

    This means some will need to renew their passport earlier than normal. It's worth noting though that it won't apply when visiting every EU country (for example, you won't need to do it when going to the Republic of Ireland).

    Some passport renewals are now shorter too

    It's also worth noting that to prepare for Brexit, the Passport Office introduced some under-the-radar changes in September 2018 – first revealed by MoneySavingExpert.com – which mean that travellers who renew their passports now get up to nine months' less validity.

    See full info in our Passport applicants given shorter renewals MSE News story.

  6. The European Health Insurance Card will continue working this year – after that, we don't know

    If you're a UK resident, you're usually eligible for a free European Health Insurance Card (EHIC). This entitles you to the same treatment at state-run hospitals and GPs that locals are entitled to, at the same cost, when travelling in the EU (plus Iceland, Liechtenstein, Norway and Switzerland and some overseas territories – see our Country-by-country EHIC guide).

    You'll continue to be able to use your EHIC card for the rest of 2020, and apply for a new card or renew yours if needed.

    However, after the transition period ends from 1 January 2021, the EHIC's future is less certain. The Government says it is discussing the future of reciprocal healthcare arrangements – including the future of the EHIC – with the EU.

    The EU and UK have already agreed that some EHICs will remain valid after 2021 though:

    • UK pensioners living in the EU at the end of 2020 will be able to continue using their EHICs.
    • UK students studying in the EU at the end of 2020 will also be able to continue using them.
    • UK and EU nationals who find themselves in a 'cross-border situation' at the end of December 2020, ie, people who are on holiday in the EU over the new year, will be able to use their EHIC to access treatment until they return back to the UK.

    Regardless of when you're travelling, it's important to check you have travel insurance that will cover you for medical costs.

    In the meantime, there's no harm in making sure you have a valid EHIC – around five million expire each year, so it's easy to forget to renew. See our Free EHIC guide for full help.

  7. Worried about holiday currency? Hedge your bets and buy some sooner

    As Martin explains in his Buy euros now? blog (written in July 2018, but still relevant now), currency moves are complex, and affected both by economics and the whims of City traders trying to second-guess those movements.

    Without a crystal ball, no one knows if the pound will be stronger or weaker in the future – or what the impact of Brexit will be. Anyone who tells you otherwise is merely speculating.

    However, if you're really worried about the value of the pound going down to make your holidays unaffordable, you could try following what Martin's suggested in the past and buy roughly half of what you need at today's best rate, then half nearer the time.

    If you're really nervous, you could ask yourself: "Would I be content with today's euro rate for my holiday money...?" If so, and your real fear is that the rate worsens so your holiday would be unaffordable, play it safe and buy more than half now.

    But if you do that, it's best to close your eyes afterwards. If the pound strengthens, you'd have been better off waiting – and you don't want that knowledge to ruin your holiday.

    For the best rates, see our 19 cheapest ways to get travel money guide and Travel Money Max tool.

  8. You'll still be able to roam like you're at home this year – but mobile providers will be able to start charging again in 2021

    In June 2017, the current 'Roam Like at Home' rules were introduced by the European Union across the EU (plus Iceland, Liechtenstein and Norway).

    This means when making calls or sending texts to anywhere in the EU, or using data in one of those countries, you use your UK allowance (or pay-as-you-go rates) as you would at home, subject to 'fair usage' rules.

    Plus there is a default €50 (£44) cap on data usage when you're travelling anywhere in the world – not just within the EU.

    These rules still apply for the duration of the transition period – so nothing's changing until 2021.

    However, the Government's now said there'll be no requirement for mobile providers to offer free roaming from 1 January 2021, so you'll need to check with yours to find out what they plan to charge.

    Three has told us it won't be bringing back roaming charges, while EE, O2 and Vodafone have said they have "no plans to do so", but didn't directly rule it out.

  9. Buying a package holiday from an EU company that targets Brits? You should still get the same protection

    Under EU law, which still applies to the end of the year during the transition period, travel firms from outside the UK that target UK consumers have to provide protection to them in the event of their company going bust.

    This will continue irrespective of Brexit, as the Government says it will amend UK law so that EU traders selling package holidays or linked travel arrangements in the UK, or specifically targeting these at customers in the UK, will be required to comply with the insolvency protection requirements.

    The Government hasn't yet made clear how it will define a company that's deemed to have targeted UK consumers.

    It's worth bearing in mind that consumers who purchase packages from EU-based traders which are not targeting business activities at the UK will not get the same protection – so you may need to check.

  10. Taking pets to Europe will stay the same this year – but there may be much more red tape in 2021

    Under the EU Pet Travel Scheme, owners of dogs, cats and ferrets can travel with their animals to and from EU countries provided they hold a valid EU pet passport. To get a passport, pets must be taken to a vet before travel, microchipped and vaccinated against rabies.

    There's been no immediate change to this due to Brexit – you'll be able to continue travelling to the EU with your pet under the current rules until the end of the year.

    What happens next year though depends on the outcome of talks with the EU. By default, the UK would become a 'third country' for the purposes of the EU Pet Travel Scheme, which means there could be much more red tape to take your pet abroad – though the exact requirements for documents and health checks will depend on what category of 'third country' we become.

    The UK Government's predicted a number of possible scenarios, but says you'll need to leave four months to consult a vet.

    • Most household pets, aside from cats, dogs and ferrets, aren't covered under one harmonised rule. So as is the case now, if you want to take one abroad, you'll have to comply with the national rules of the EU country you're going to.

      The exception to this is horses. From 2021, it is possible that UK horse owners may not be able to take their horses into the EU at all, although the Government says it hopes to reach an agreement so that this doesn't happen.

  11. Driving in the EU? There are no new requirements this year – but next year you'll need a permit in some countries

    At the moment, if you have a UK driving licence you can drive in the EU, Iceland, Liechtenstein, Norway and Switzerland without any extra documents. This hasn't changed as a result of Brexit, and will continue to remain the case this year. (And likewise, if you have an EU driving licence but live in the UK, you can continue to drive as normal.)

    But next year, the Government has announced there will be new requirements:

    • You'll need an international driving permit (IDP) to drive in some European countries. These cost £5.50 and it's possible you may need more than one. You can see if you need an IDP here – although the information will likely be updated over the next few months as more information comes to light. We've asked for a full list of the countries you'll need an IDP for and will update this guide when we know more.

    • If you're taking your own vehicle, you'll also need a 'green card'. This is an international certificate of insurance issued by insurance providers in the UK, guaranteeing that the motorist has the necessary minimum level of third-party cover (you may need to pay if you want a higher level of cover). To get one, contact your insurer. It will send you your green card and you need to carry the physical document when you travel. You'll also need a GB sticker.

    UK citizen living in the EU? Exchange your licence ASAP

    If you're a UK licence holder living in the EU, the UK Government says you should exchange your UK driving licence for a local EU driving licence before the end of the transition period, ie, this year – there's info on how to do that on the EU website. UK licences can still be exchanged in the EU without retaking your driving test, as long as you submit your application before 31 December 2020.

    After January 2021, you may have to pass a driving test in the country you live in to be able to carry on driving. This depends on local rules and the outcome of the negotiations.

    If you return to live in the UK, you'll be able to exchange your EU licence for a UK licence without taking another test, so long as you got your initial licence from passing a test in the UK. EU licences will continue to be exchanged even after the transition period, so there shouldn't be a rush to exchange them during the transition period in particular.

Consumer rights and financial security

Much of the UK's financial services legislation comes from EU directives. These allow banks and other financial services firms to offer banking, saving or lending services across the EU without needing to be regulated by each individual country's financial regulator.

Some of the most important consumer rights laws in the UK – such as the Consumer Rights Act, which provides protection when you buy goods online and in store – are also based on EU directives.

Here's how the land will lie after we leave the European Union:

  1. You'll still be protected up to £85,000 per person per financial institution with UK-regulated banks

    In the event a bank goes bust, the Financial Services Compensation Scheme means you are protected for up to £85,000 per person, per financial institution, provided that it is a UK-regulated bank. See Are your savings safe? for more info.

    This is continuing post-Brexit.

    Almost all main savings accounts are UK-regulated, including the likes of Santander (which has a Spanish parent company) and ICICI (which has an Indian parent company). And since Brexit was announced, more foreign banks, such as RCI Bank (which is French) have got UK banking licences.

    There is likely to be little change on this in future, regardless of Brexit. The only thing that might change in the future is the amount. It is currently based on the EU rules which say all member states must give €100,000 protection. The UK amount does change occasionally due to currency moves.

  2. EU banks that operate in the UK will be able to continue to do so for at least three years

    Firms authorised in European Economic Area countries can offer most of their services in the UK under a system known as 'passporting' – where a firm in one EU member state can provide services to customers in other member states without having to get direct authorisation in those other states.

    It means that banks such as Fidor Bank – regulated by German regulators – are able to offer savings accounts to UK customers.

    The Government is running a 'temporary permissions regime' after Brexit, which allows firms already in the UK to continue to operate for up to three years.

    In the meantime, many EU-regulated banks are applying for UK licences, which mean that if you bank with them, your money will protected by the Financial Services Compensation Scheme – up to the value of £85,000 – in the unlikely event that the bank went bust. This is the same protection you get with a UK-based bank. Some overseas service providers, such as RCI Bank, have been given UK licences already.

  3. Your basic consumer rights won't change – but seeking redress from EU traders may be tougher next year

    Some of the most important consumer rights laws in the UK, such as the Consumer Rights Act which provides protection when you buy goods online and in store, are UK laws in their own right – so they won't change when the post-Brexit transition period ends, even though some of their content is based on EU directives.

    However, if you're buying from a trader based in the EU post-Brexit, things may get a bit trickier next year.

    EU consumer protection legislation ensures consumers across the EU can buy goods and services from other EU countries, knowing that the protections and safety standards are the same or similar in every EU member state.

    For example, if a UK consumer buys an item from an EU-based trader and the item does not arrive or there is a problem, the UK consumer can use UK law and the UK courts for redress, and judgment will be recognised in the EU member state in question.

    While nothing will change in this respect during the transition period this year, talks with the EU will determine whether you're still able to use UK courts to settle an issue with an EU trader from 2021.

  4. The UK will remain part of a key euro payments system

    At the moment, UK-based payment service providers have access to central payments infrastructure such as the Single Euro Payments Area (SEPA), which allows customers to make cross-border payments at a low cost, or sometimes for free.

    On 7 March 2019, the UK's application to remain in the geographical scope of SEPA schemes was approved. Euro SEPA payments can continue to be made through existing arrangements.

  5. UK banks are shutting thousands of British expats' accounts

    Thousands of Brits living abroad in Europe are being told their UK bank accounts or credit cards will be closed by the end of the year as a result of Brexit. We've full help below on what you can try if your account's being closed, plus the latest on what all the major banks are doing.

    Lloyds, Halifax and Barclaycard are among the big names who've started telling customers that due to rule changes linked to Brexit they will be closing accounts – though in some cases the situation depends on which European country you live in. Many other banks have refused to rule out closing accounts, saying they're closely monitoring the situation.

    If your account is being closed, you may still be able to open another with a different UK bank or may be able to use a local bank instead – see more help below.

    See our UK banks to shut thousands of British expats' accounts – what to do if yours is being closed MSE News story for more information.

What is the impact on EU citizens living in the UK?

While Brexit affects everyone in the UK, the most immediate direct impact will be on the 3.8 million people living here who are citizens of other EU countries.

If you're one of them, here's what you need to know:

  1. You'll have to apply to stay here long-term

    If you're an EU, European Economic Area or Swiss citizen living in Britain, you won't have to leave the UK because we've left the EU. But you and your family may have to register with the EU Settlement Scheme to continue living in the UK after 30 June 2021.

    • Settled status will be given to successful applicants who, by the time they apply, have been living in the UK for at least five years.

    • Pre-settled status will be given to successful applicants who won't have lived in the UK for five years by the time they apply.
    • Both settled and pre-settled status will mean you can live and work in the UK, enrol in education or continue studying, use the NHS, access benefits and pensions if eligible, and bring family members to the UK to stay long-term.

      If you get pre-settled status, you can:

      • Stay in the UK for a further five years from the date you get pre-settled status.
      • Apply for settled status as soon as you've lived in the UK for five years and spent at least six months of each year in the UK. You will not need to pay a fee.
      • Spend up to two years in a row outside the UK without losing your pre-settled status.

      If you get settled status, you can:

      • Stay in the UK for as long as you like.
      • Apply for British citizenship if you meet the requirements.
      • Spend up to five years in a row outside the UK without losing your settled status.
      • Your children will automatically become British citizens.

    The deadline for applying is 30 June 2021.

    Full details on what you'll need in order to apply can be found on the Government website, but in brief, you'll need information such as proof of identity and proof of residence in the UK. If your application is not successful, you won't be able to stay in the UK – although you can appeal a decision and reapply.

What will the impact on UK citizens living in the EU be?

Before Brexit, all UK citizens were also EU citizens, which meant they could go live and work anywhere in the European Union – from Seville to Stockholm – without needing to apply for a visa.

If you do live abroad, here's what you need to know:

  1. If you already live in the EU or are moving there this year, you'll be able to stay there

    During the transition period until the end of this year, nothing will change for Brits living abroad in the EU. Until 31 December 2020, your rights and those of your family members will not change. You will be able to continue to live, work and study in the EU as you do now.

    If you are a UK national lawfully residing in another EU country on 31 December 2020, you will be able to stay in the EU country where you live.

    You will maintain broadly the same entitlements to work, study and access public services and benefits as you did pre-Brexit.

    You and your family may need to apply for a residence status to confirm that you were already resident in the EU country you live in before 31 December 2020. You will have until at least 30 June 2021 to do this.

    The EU country where you live will set up a system for applying for a residence status. The application will be short and simple, and either free of charge or cost no more than applying for a similar document, for example a national identity card or passport.

    For full information you'll need to go to the government of the EU country that you live in or plan to live in, though there are more details on Gov.uk, including Living In Guides.

  2. Planning to study abroad? You'll still be able to get Erasmus+ funding until the end of 2020

    Erasmus+ is a programme for education, training, youth and sport. The best-known aspect of it is the university exchange programme, which allows students from the UK to study at European institutions for a year during their degree.

    Eligible students receive an Erasmus+ grant provided by the European Commission – this is paid through your institution. This grant contributes towards the extra costs you may encounter from studying abroad.

    Funding for the Erasmus+ scheme will definitely continue until the end of this year, as the UK Government says it will cover the payment of awards to UK applicants for all successful Erasmus+ bids submitted until 31 December 2020.

    From next year, the Government says it hopes the UK will continue to be part of the programme, but it depends entirely on any arrangement it agrees with the EU.

This is a rapidly changing guide. Let us know what questions you have about Brexit – and give us your feedback on this guide – in the Brexit need-to-knows forum thread.