Insure yourself against Brexit D-Day
Is anybody weary of listening to political speculation about what form we'll be in after Brexit?
It's causing enough hot air in Westminster to heat the whole of Lisburn.
Personally, I'm with John Kenneth Galbraith: “the only function of economic forecasting is to make astrology look respectable.”
But when a respected international accountancy firm like EY make a statement, the world stops to listen.
EY predict Northern Ireland will lose 3,500 jobs by 2020 compared to 2016, while in the same period the Republic will gain 91,000 jobs.
We've already seen examples of manufacturers shifting production out of the UK in order to preserve access to EU markets. Example: in a leaked report the Japanese government warned the UK not to leave the European customs union, as this would make it expensive for Japanese cars made in the UK to be sold into the EU. And with 879 Japanese companies, including manufacturing giant Hitachi and carmakers Honda, Nissan and Toyota employing 142,000 staff in the UK, it's a serious warning.
I love the Japanese. Polite even when they're threatening you.
Meanwhile back at the cabbage patch, EY's figure of 3,500 job losses in Northern Ireland threatens all of us as Brexit D-Day looms in March next year. It reminds us of the need to insure ourselves and our family against the possibility of loss of income due to possible layoffs. I'm reminded of the Lotto catchphrase ‘It could happen to you' – but not in a good way.
Aviva, in their latest Family Finances Report, remind us that, in terms of being ready for a loss of income by insuring ourselves, we're really not very good at it. Life's too short to worry about losing your job – isn't it? Well, for 3,500 of us over the next two years, it may not be.
A third of us (32 per cent of families) do worry about losing an income through ill-health or redundancy, Aviva say, and over a quarter of families have already experienced a loss of income due to ill health, serious illness or death – even before we add in those who have lost a job.
Despite these risks, 45 per cent of family breadwinners still do not have life insurance, 70 per cent do not have critical illness insurance, and 77 per cent do not have income protection insurance, to provide a replacement income.
The vast majority of parents (76 per cent) admit they have no financial plan in place to anticipate loss of income.
We are also very prone to kidding ourselves over how long our current lifestyle could be maintained, if we had to stop work. We typically reckon we'd be ok on our savings for around five months – but digging deeper, Aviva found we're living in a fantasy here, and in fact our reserves would be used up in just four weeks.
Let's say you don't have any insurance or backup income. What happens to you as a family, if you have to give up work or are laid off?
Aviva has the answer. One in five (19 per cent) families who didn't insure themselves have to downsize their home, or move in with relatives for a while, or rent, while 6 per cent said they had to resort to borrowing ‘from a non-high street lender' to get through – saddling themselves with expensive debt.
Fears over future price hikes in basic necessities are cited by 43 per cent of families, as cost of living warnings resonate towards March 2019 - much of our food, fuel, and heat depend on imports, and as Galbraith points out, we'd be better off depending on astrologers rather than economists to predict if we'll still have our wage and our job, when the dust settles on the new EU.
See? I write long paragraphs when I get annoyed. It could be time to consider taking out some insurance, in case we become one of the EY 3,500, losing our job when the new order kicks in.
:: Michael Kennedy is an independent financial adviser and pensions specialist and can be contacted on 028 71886005. Further information is available on the Facebook page 'Kennedy Independent Financial Advice Ltd'.