Since June 2016 when the UK voted by a slim majority to leave the European Union, the UK economy has continued to grow modestly, albeit with the support of a post-referendum Base Rate cut. Despite this resilient business performance, the mainstream media narrative continues to be rather gloomy, forecasting a decline in living standards and a long-term economic contraction. Yet the ongoing high-profile debate between policymakers, business and media generally excludes the opinion of the man and woman on the street – the very people who voted back on 23rd June 2016. However, new research carried out by Deloitte seeks to balance the picture by revealing the consumer view of Brexit.
Brexit not top of the list of concerns
There’s no doubt that Brexit has been hugely divisive for UK society at an individual level and also across regions and broader socio-demographic segments. And this is an issue, or a potential issue, upon which the media continues to shine a spotlight. Yet perhaps the most remarkable insight from the Deloitte study is the data revealing that Brexit doesn’t generally figure in the list of top five issues that concern people right now – a list which is dominated by the state of the NHS, the economy and the environment, with Brexit coming in a lowly 6th place.
The impact on consumer confidence
Does it matter whether people are worried or not by Brexit? The short answer is a resounding “yes”, because of its potential impact on consumer confidence. And in an economy like ours, where consumer spending makes such a large contribution to GDP, consumer confidence is a key driver of overall economic performance. Decisions made at an individual and household level over whether to save or spend, and what to spend on, have a significant influence on most UK businesses. When confidence is strong, the whole economy enjoys a boost as the velocity of money increases and businesses experience a surge in demand. The good news is that according to the Deloitte study, in quarter three of 2017, consumer confidence was a full percentage point higher than immediately post referendum.
A highly divisive issue
Changes in consumer confidence are driven by a multitude of factors, including household income, inflation, employment prospects, house prices, economic outlook, personal debt and national economic growth. And the Deloitte analysis drills down to reveal consumer confidence at a component level. The data reveals a strongly negative outlook for cost of living, UK economic growth and household spending. Yet interestingly, it also shows that this negative outlook is largely driven by the pessimistic views of Remain voters – which in itself is not surprising, as this view is likely to have played a major role in voting behaviour. While the far more optimistic view of Leave voters serves to balance the overall view, and highlights the highly divisive nature of the 2016 referendum and the ensuing Brexit debate.
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