It looks like the UK’s decision to leave the EU is already creating some ripples. Data from IHS Markit’s Purchasing Managers’ Index (PMI) shows a fall to 47.7 in July, which indicates the economy is contracting.
A decline in the economy can often translate into an increase in unemployment, which means that now may be a good time for Britons to take a closer look at their finances. With predictions of a possible recession now in the headlines, people will need to think about the importance of savings in particular.
Unfortunately, as we’ve noted on this blog before, there’s simply not enough saving going on in the UK – particularly among the young – with many still finding they don’t have money spare. But even for those that do, low interest rates mean the rewards are meager – and expected to stay that way. The expected downturn in the economy means that we’re unlikely to see interest rates rise any time soon, which means that saving will remain unattractive to some.
That’s a worry for all sorts of reasons. One big one is that 12 million people – not far off a third of the working age population – aren’t saving enough for retirement. Another is for those that don’t make it to retirement. With low savings rates, many of the 75,000 adults who die before 65 each year leave relatively little behind for their loved ones to cope with any expenses or ongoing bills.
Brexit may be causing uncertainty in the markets – but some truths are unavoidable. If you fail to protect your financial future now, no one will do it for you later.