Not a news bulletin goes by these days without some mention of the eurozone crisis, whether it is yet another meeting of world ministers to try and sort out the mess, or another bit of bad news that is causing markets to plunge or currencies to bounce again like yoyos.
If you have not got a foreign holiday home in the Eurozone, or investments that could be affected by the market volatility, you could be forgiven for thinking that the eurozone crisis does not really affect you. But you need to think again.
While Britain is not part of the single currency since pulling out of the Exchange Rate Mechanism (ERM) in 1992 on what became known as ‘Black Wednesday’, but we are very much a part of Europe. So although the ups and downs of the single currency do not directly affect the value of our savings, for example, it most certainly has an impact on us as a whole.
You see, the European Union is our biggest trading partner, and that affects our businesses. The crisis has meant the euro itself has weakened against the pound in recent months, with the euro at nearly €1.25 to the pound at the time of writing. Just over a year ago, it was closer to €1.10 to the pound.
This is great news if you are going on holiday to the eurozone, as you will get more for your money. But for UK businesses, it means that exports are down as eurozone countries are having to find more money to buy the same products, and that is reflected in the official figures. The UK’s exports to the EU went down by a fifth between March and April this year, falling to £11.4 billion – £2.9 billion down on March.
Now, again, this may not resonate with you directly. But think about it – this could be your employer that is seeing his or her business reducing by such a large amount in such a small time, and if the business starts to lose money, the next step is to cut staff to make ends meet. So, as we have seen, redundancies have increased and more people are having their hours reduced as a result of the cut backs.
If this happens to you, then you are directly affected by losing a salary outright, or seeing your income reduced because your hours have. Anyone already struggling with debts and finding themselves in this position is going to get into serious trouble very quickly, so do not delay before you ask for help.
There are some things you can do – for example, your PAYE is calculated on you working your full hours for 12 months. If your hours are cut part way through the year, then you need to make sure the extra you have paid in tax is rebated to you. Speak to your personnel department or HM Revenue & Customs directly for help. The same applies if you are made redundant.
You also need to be sure you are claiming all of your tax credits – a change in your circumstances could make you eligible where you were not before, or ineligible where you were. Use the HMRC tax credits calculator to find out what you can get.
So next time you see the eurozone crisis on the news, pay attention – it affects you more than you might expect.