Voting with their wallets? Consumer expectations after the EU referendum

Voting with their wallets? Consumer expectations after the EU referendum
Tamara Li, Nicola Shadbolt, Thomas Stratton and Gregory Thwaites
Bank Underground, 10 JANUARY 2018






Consumption growth remained fairly steady in the immediate aftermath of the UK vote to leave the European Union in June 2016. But how did consumer expectations evolve in the first months after the referendum? We show with the Bank’s in-house household survey that ‘Leavers’ became more positive about the economy and their own financial situation after the referendum, with the opposite true for ‘Remainers’, and that this was reflected in spending by the two groups. But the size of the effect was small.

The national accounts show real household consumption to have grown by an average of 0.7% in the second half of 2016, a similar rate to the first half of the year. Consumption growth subsequently slowed to 0.4% and 0.1% in 2017 Q1 and Q2 respectively.

What explains the resilience of consumption in the immediate aftermath of the referendum? The Bank’s NMG survey of households, collected over the first few weeks of September 2016 and again in April 2017, can shed some light.

The NMG survey of households might help shed light on why…

The Bank of England commissions NMG Consulting to conduct a survey of households twice a year in April and September. The survey provides data at the household level on both finances and attitudes towards topical issues of the day. This allows for analysis which splits responses by different groups in the population.

The September 2016 and April 2017 surveys included questions regarding the EU Referendum result. These included a question on attitudes towards the result, as well as its perceived impact on finances at a household level and the economy more generally. Some households respond to successive surveys, allowing us to track changes in attitudes over time. The full dataset can be downloaded from the Bank of England’s website.

Individuals in the NMG survey were asked “Taking everything into account, how do you view the UK voting to leave the EU (European Union) in the recent referendum – which has become known as ‘Brexit?”. We use this as a proxy for which way individuals voted. In what follows, we assume those who responded positively voted to leave , and those who responded negatively voted to remain (we call these “leavers” and “remainers” respectively). We think it’s a fairly good proxy, as it paints a very similar picture to YouGov’s exit poll (Table 1). For example, 66% of the youngest respondents (18 – 24)were “remainers” according to the NMG survey, compared to 71% in the YouGov poll. While for the oldest group (65+) the results were identical with 64% as “leavers”. Time spent in education was also consistent with a higher propensity to be a “remainer” in both the NMG and YouGov surveys.

Table 1: Comparison of key demographic trends in EU referendum voting patterns across the NMG survey and YouGov exit poll


In aggregate, results from the NMG survey suggest that expectations were little affected by the referendum result…


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