What will happen to your money in 2019?

There’s one word that clings to the lips of all those attempting to forecast what will happen to our money in 2019. And that word is “optimistic”.

I’m kidding. It’s “Brexit”.

From petrol prices to property, supermarket shopping to stock markets, the wide range of scenarios that could play out next year are already causing havoc with the economy and, ultimately, our financial circumstances.

While we know that personal habits, tax tweaks and new laws could make a huge difference to our everyday money, bigger events of 2019 set to enter the national, continental and world stage will probably have more subtle but no less profound implications for our cash.

We asked business leaders and independent experts for their take on the imminent future of key industries and sectors that could directly and fundamentally affect our everyday financial affairs in 2019.

Investments

Straight in at the deep end, Richard Stone, chief executive of the Share Centre, agrees with the assumptions of many that the Brexit outcome will define what happens to markets in 2019, not that any really knows how that one is going to resolve itself.

“My central expectation is that an extension to Article 50 will be requested to allow time for a second referendum as parliament fails to coalesce around any outcome to deliver Brexit and instead abdicates its responsibility back to the people clothed in the claims that this presents the most democratic resolution of the issues. This will then likely lead to a vote to Remain, likely followed by a general election.

“If that happens I believe the markets will continue to be volatile in early 2019 but will rally on the prospect of no Brexit. This will also likely result in a bounce in the value of sterling which will temper the rise, or at least the pace of the rise, in the FTSE 100 slightly due to the overseas earnings component of many of the FTSE’s constituents.

But the B-word shouldn’t blind us to the other events influencing global markets.

“Away from Brexit, more volatile US politics and potentially increased trade tensions – as President Trump continues to promote an America First agenda as he starts his re-election campaign – is likely to weigh on US markets or at the very least cause them to be more volatile,” says Stone.

“Finally, the drive towards greater regulation and taxation of the tech giants will likely weigh on some of their performance. Personal investors will need to be alive to trying to identify the new emerging companies or trends.

“Overall I believe 2019 will be a volatile year for markets,” Stone warns.

“Personal investors will need to tread carefully if trading in and out of the market. For most who take a long term view the volatility may present some buying opportunities and will likely benefit those who invest a little and often as pound-cost averaging takes effect through the volatility. Personal investors should take a long term view of their investing activities, and if looking across the long term then riding through that volatility is a sound strategy.

Everyday goods

“Despite an autumn Budget seemingly dedicated to reviving the struggling UK high street, the effect of Brexit negotiations on the retail industry is apparent in the very low levels of consumer spending,” explains Will Broome, CEO and founder of shopping app Ubamarket.

Even with the lure of Black Friday and other seasonal offers, consumer spending slipped 0.7 per cent in November compared with last year. The reluctance to spend money, coupled with Theresa May’s proposals for stockpiling food and medicine, make it difficult for retails and consumers alike to understand the impact Brexit will have on the cost of everyday items.

“Our research has shown that a majority of Brits believe Brexit will make the weekly shop more expensive,” Broome adds.

“Given that much of the produce we buy is imported from other countries in the European Union, this concern is entirely warranted. May’s stockpiling of food may seem like a prediction of empty supermarket shelves but the reality is that Y2K style prepping is most likely unnecessary.”

Utilities

But if that isn’t quite as bad as you were braced for, now is not the time to relax.

“Brexit has undeniably had a negative impact on our household energy bills with research stating that a no-deal Brexit could cost the average household around ?61 per year,” warns Jane Lucy, CEO of energy switching service Labrador, who says the EU currently supplies 5 per cent of the UK’s electricity and 12 per cent of gas.

“Upon our exit, Brexit is set to further drive up energy bills due to increased tariffs on importing gas and electricity across the Channel,” she says.

“As the EU energy market is one of the most integrated markets across the continent, it is undeniable that the public deserves assurances as to the financial impact that Brexit will pose.

“Energy suppliers and regulators need to be forthright to their customers now more than ever about the impact that Brexit will have on energy bills. It is vital to stress however, that while the cost of Brexit on our utility bills remains somewhat uncertain, there are always innovative technologies that can ensure you are always on the cheapest payment plans.”

Property

While most property experts will try very hard to spin a positive angle from the most challenging of decent housing stats, few deny there have been and will continue to be difficult market conditions into 2019.

“This year has been tough for the industry with house prices taking a month-on-month hit, flipping the north-south divide,” admits Simon Bath, CEO of online conveyancing service When You Move.

“London and the southeast are facing an unprecedented decline in house price growth, with the northwest and west midlands flourishing and becoming hubs of domestic and international investment.

“While we wait for clarity on Brexit negotiations, the property market is likely to have a slow start in the New Year until the UK’s formal exit from the European Union.”

But Brexit isn’t the only show in town, notes Russell Galley, managing director of Halifax.

“Aside from the obvious political and economic uncertainty, the biggest issue for the housing market in 2019 will be the degree to which mortgage payment affordability changes. Average pay growth is likely to gather pace but, with a further interest rate increase also predicted, house prices are unlikely to be pushed significantly in either direction.

“Despite current political upheaval, and on the basis that it is still most likely that the UK exits the EU with a form of withdrawal agreement and transition period, we expect annual house price growth nationally to be in the range of 2 per cent to 4 per cent by the end of 2019. This is slightly stronger than 2018, but still fairly subdued by modern comparison. However, the uncertainty around how Brexit plays out means there are risks to both sides of our forecast.

“Longer-term, the most important issue for the housing market remains addressing the affordability challenge for younger generations through more dynamic housebuilding.”

Credit and borrowing

Speaking of affordability challenges, Dr Roger Gewolb, executive chairman of FairMoney, worries that times like these could push those already struggling into greater problems.

“There are currently 14 million people in Britain living in poverty, and uncertainty around events such as Brexit do not help people’s money in their pocket,” he says.

“With wages growing at their fastest rate for a decade but the risk of products from Europe potentially becoming more expensive, households will struggle to accurately budget throughout and after this Brexit process.

What we must remember that many are still being pushed towards unscrupulous lenders to tide them over from one month to the next, paying extortionate interest rates and affecting people’s finances even more. This is fundamentally unfair. The government and the appropriate bodies must do more to ensure that people have access to finance at a fair rate.

“We are yet to see the full consequences of what Brexit will mean for jobs and the economy, but if many are left unemployed, having access to secured loans and other finance options may be the only way some will be able to survive.

“This could potentially open the door for more payday lenders to swarm the market, as they did in 2008, and take advantage of a situation in an unfair manner. As a society, we should put more pressure on the government to ensure that we, as consumers, are treated fairly by lenders and are not taken advantage of in times of uncertainty.”