Will KirkmanThu, 11 February 2021, 1:05 pm
Expats will struggle to access crucial services if British banks fail to gain entry to European Union markets, experts have warned.
The trade deal announced in December between the Government and the EU did not include an agreement on financial services, making it difficult for British firms to operate in the bloc.
Much of the access British firms used to enjoy could be restored through the EU’s so-called equivalence regime, but Bank of England governor Andrew Bailey has warned the bloc could refuse to grant access to the City.
Will my mortgage costs rise?
Mortgage rates are partially decided by swap rates between banks, which can take place over international borders, and the failure to strike a deal in this area may have some impact on what British mortgage borrowers pay. If domestic banks are unable to borrow as cheaply, this could push up the interest rates for consumers.
Andrew Pilgrim of accountants EY said it was unlikely prices would be affected in the short term, but reduced connectivity between the two markets could make certain financial products more expensive in future.
What about expats?
This spat could have a devastating impact for Britons based in the EU, many are already being rejected when applying for mortgages from British providers. Some banks have refused to offer mortgages to customers based in Europe, even if they are trying to buy a house in Britain and return home.
These issues are likely to continue if no new deal is established. Expats are also being stripped of their bank accounts. The current rules mean British firms can honour existing contracts for expats but cannot offer more than what is known as “basic servicing”.
Small business owners could also be hit with increased trading costs when doing business in the EU if a deal is not reached.
Will insurance premiums be affected?
The insurance industry is yet to see the details on reciprocal agreements which pay for the European Health Insurance Card. If travel claims costs rise for British firms as a result, this could push up the price of travel insurance.
However, domestic car and home insurance prices are unlikely to be affected if British firms fail to gain access to EU markets.