Today’s Eurozone news is bleak. The Greek government’s in turmoil, European interest rates have been cut. It is a genuine financial crisis. Unsurprisingly, the question I’m often being asked is: "What does it mean for me?" So I thought I’d try and give a simple answer.
The impact on individual’s finances is limited
For most individuals in the UK the actual direct impact is negligible. Very little has changed. The markets are a worry for those with pension funds, but actually the market is up slightly compared to a few weeks ago. Even without this, it’s only a paper loss unless you sell. Though for those nearing retirement it is a worry – as it’s a big decision deciding when the right moment to convert a pension to an annuity is (see the Annuities guide).
The real impact is for ‘us’
That’s why the real worry isn’t for you, but for us collectively, our economy as a whole. While we’re quite removed from Greece, the nightmare scenario is a domino effect (the game, not pizzas) that could sweep across Europe and eventually topple on us too.
That would have a hit on the real economy, at best, further effecting jobs, salaries, the ability to borrow and stability, and at worse putting our entire financial system under threat of collapse (if you have savings it’s worth double checking the Are my savings safe? guide.)
Yet if I were looking for a bright spark amongst the overwhelmingly black sky, if we are heading for a recession, it’s likely to result in lower demand for oil, so energy and petrol bills could drop on the back of it. Plus of course, specifically with the Euro weakening, it means things will be cheaper for those who go abroad.
So that’s my view in a nutshell, though remember my specialty is personal finance, not economics. Is there anything I’ve missed?