What will Brexit mean for Expats in 2018?
Following the EU Referendum, the UK declared Article 50 on March 29, 2017, triggering a 2-year window in which to negotiate the UK’s exit from the European Union. With just one year before the Article 50 period expires, the countdown to Brexit is looming closer and closer.
Many expats are worried about their status as a British or European citizen, but the good news is that protecting reciprocal rights and continuing to enjoy the benefits of free trade should continue under any transitionary deal. Plus, it’s looking more likely that any such deal could last longer than previously thought.
A smooth transition?
The UK made history on June 23, 2016, when it voted to leave the EU. Nothing has substantially changed since, but the end of the Article 50 period, on March 29, 2019 - the “withdrawal date” - will be an important point. This marks the first time an EU member state will have withdrawn its membership from the EU since its creation.
Whilst there has previously been huge uncertainty, the withdrawal agreement which was approved in December lays an important framework for expat rights. Theresa May’s Florence speech made clear that the UK will seek a deal which will ensure a smooth transition from inside to outside the EU. The finer details are still to be discussed this year, but it is looking likely it will ensure a continuation of most existing rights and obligations.
UK expats in the Netherlands: Your rights
UK expats in the Netherlands, what are your rights?
- Right to remain - Expats legally residing in the Netherlands before the withdrawal date will have a right to remain.
- Family Reunification - Dependant family members have a right to join them after the withdrawal date.
- Court Proceedings - The European Court of Justice (ECJ) will enforce such rights for up to 8 years after the withdrawal date.
- Permanent Residency - Expats residing in the host country for 5 years before the withdrawal date acquire permanent residency.
Whilst the withdrawal agreement from December aims to set some foundation on the above issues, there are still a number of unresolved scenarios for both British expats in the Netherlands and EU nationals in the UK.
Exchange rates will remain highly volatile
Key tests now lie ahead for the UK economy, as businesses and consumers digest the news and have to make informed decisions about their finances. For businesses, the prospect of losing access to their biggest market will weigh heavily on their decision making. Even with expectations that the transitionary deal will continue access to the single market in some form, many UK businesses are being forced into making plans for a “no-deal” Brexit.
Until the transitionary deal and trade talks are underway, it is difficult to be specific. The expectation is that the final deal will be concluded by October, thus allowing the EU time to present the final arrangements to the other EU members for voting.
We have seen how the increased confidence of a softer Brexit, one that does less harm to the UK economy, has given the Pound a lift. The Pound could strengthen due to this news, as further confidence is given from Brexit progress talks.
However, just as December’s deal was rushed through at the last minute after weeks of uncertainty, we could also see the coming months trigger GBP weakness, as investors fear a no-deal or that the goodwill extended to the Pound so far was misplaced. In essence, comments from British and European officials will be the main driver for GBP/EUR throughout this year, and it would be unwise to just assume negotiations will go smoothly with 27 countries ready to veto any deal the UK gets.
How to deal with the possible exchange rate fluctuations
There are options available to you if you are worried about exchange rate fluctuations, for example, a forward contract option from a currency brokerage will allow you to lock in a current rate for up to 12 months, providing you with peace of mind for the majority of the Article 50 window.
If you plan to send money in stages, such as a pension fund or student allowances, a regular payment plan will allow you to send funds throughout the month at an agreed rate, which in most cases would be better than your high-street bank.
If timing is less crucial and you’d rather wait for the desired rate to become available, a limit order contract may be the ideal solution for you. Between you and a broker, you can set a rate by which your funds will automatically be purchased once the market moves in your favour.
With the Article 50 process likely to continue past the withdrawal date of March 29, 2019, it may be worth considering one of the above options, so that you can plan around any spikes or falls in exchange rates.