The date July 14th 2016 is officially the day that Theresa May become the Prime Minister of the United Kingdom. As only the second female prime minister in British history, she has already created major waves. In her first full day in Downing Street, she has formed her first cabinet and made some interesting appointments.
But what does all this mean for the average man and woman in the street? Only time will tell as to what it means for them, but it is possible to make some predictions based on recent events.
Long-Term Economic Policy Will Stay the Same
The good news for homeowners is that the same economic policy David Cameron implemented will likely remain the same. Theresa May is seen as a steady hand and prefers to hold the centre ground of politics. Although she has yet to say what she will aim to accomplish, it is clear that she is highly likely to follow an economic policy she previously gave full support to.
For homeowners, this will be a welcome relief because it will mean no major changes anytime soon, particularly to interest rates.
Is Brexit Still Going Ahead?
There is no doubt that the course of Brexit will continue as before. Brexit is something that Theresa May campaigned against, but she has already said that she will respect the outcome of the vote. It would be unthinkable for her to try to overrule the will of the British people.
That means the economic fears raised by various parties may well come true. This will be a time of consolidation for those concerned about their home finances. It makes sense to avoid any major purchases or any attempts to take out lines of credit now.
Has the Sterling Recovered?
If you are going on holiday this summer, you have likely thought about what Brexit means for your holiday money. But with the election of a new Conservative Party leader, the irresistible drop in Sterling has stopped. It fell to lows of 1.28 to the dollar, but it has bounced back to reach 1.33 to the dollar.
This is the time to purchase your holiday money and to lock in those great rates. Most financial analysts agree that the bounce back has happened because of the ending of the uncertainty surrounding who will lead Britain during the next few years. But they also agree that Sterling will continue to drop when Theresa May triggers Article 50.
Will Taxes Go Up?
It is almost a British tradition that whenever a new Prime Minister begins their term, they will put up taxes. Rarely does this come in the form of income tax, but other taxes tend to rise, as it did when Gordon Brown became Prime Minister. But you should not expect this at this time.
Due to the splitting of the country over Brexit, the May Government’s top priority will be to stop the instability. On the contrary, they will seek to avoid making any major policy announcements, other than those relating to Brexit.
In short, your home finances likely will not change that much as a result of any tax increases, at least not at this time.
What Does the Future Hold?
The future is one that becomes clearer by the second. The speedy election of Theresa May is better for the British economy and the British people. The longer uncertainty lasts, the lower Sterling falls, and the more skittish businesses become about expanding.
But households should avoid making any major purchases using credit at this time. The uncertainty that will afflict the British economy once Article 50 is triggered could be terminal. Those paying back loans are going to be most at risk when the economy begins to shift.