UK warns no-deal Brexit to hit prices, pensioners

At an institutional level, UK investment banks will have more difficulty selling services into the EU

By BLOOMBERG

LONDON • Britons face higher prices when buying from the European Union (EU) unless the government can secure a Brexit deal, while retirees in countries like Spain risk losing access to pensions paid into UK banks.

That’s according to 25 technical notes published yesterday by Brexit Secretary Dominic Raab (picture) setting out how businesses and citizens should prepare for the possibility of talks with the bloc collapsing.

He was grilled about how companies would be burdened with more red tape and how costs for consumers would rise, including on credit card payments. The financial fate of elderly Brits settled in cheaper, warmer countries in the EU came up repeatedly.

“It’s hardly in the interests of southern Spain to do harm to the UK pensioners out there,” Raab said when asked about pensions. “And what you’d expect is to see, even in the unlikely outcome of a no deal, is actually cooler heads prevailing.”

Financial services drew the biggest scrutiny given how tightly integrated the UK is into the EU’s structure. The nine-page banking document warns that British companies will lose access to European payments infrastructure such as TARGET2 and the Single Euro Payments Area.

Customers “could face increased costs and slower processing times for euro transactions”, the paper says. “The cost of card payments between the UK and EU will likely increase.”

That’s because an EU rule preventing surcharges on transactions would no longer apply. Meanwhile, people in Europe who rely on UK banking services “may lose the ability to access lending and deposit services, insurance contracts”.

At an institutional level, UK investment banks will have more difficulty selling services into the EU. The government concedes it won’t be able to guarantee the derivatives contracts will still operate between EU and UK forms. UK exchanges may not be able to list EU companies.

Other businesses that trade with the EU are urged to “take account of the volume of their trade”. Goods coming in and leaving would need Customs declarations and importers would need to register. These extra series of steps will inevitably raise prices for British consumers.