Table of Contents
Key Findings
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- Consumer sentiment
- Sentiment was hit post-vote, but rebounded in August
- 84% say that they’re either “confident”, or that they’re “concerned but should be fine”
- Possibility of a hit to spending on the home
- The economic environment
- A campaign fought on economic territory
- Early macro-economic indicators suggest no immediate crisis…
- …but two months is far too early for the full effects to be felt
- Key economic indicators
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- Figure 1: Key economic indicators, August 2016
Consumers’ Response to the EU Referendum Result
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- What you need to know
- Macro-economic expectations
- Consumers expect the worst for the UK…
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- Figure 2: Consumer views on the impact of the EU Referendum on the UK economy, July 2016
- …with the cost of living being a particular concern
- Will the income squeeze return?
- Personal expectations
- People are much less negative about their own finances
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- Figure 3: Consumer views on the impact of the EU Referendum on their own finances, July 2016
- Regional and demographic differences
- A complex regional split
- Younger people fear for the impact on their own finances
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- Figure 4: Expected impact of the EU vote on respondents’ career prospects, by age, July 2016
- Financial vulnerability shapes people’s Brexit expectations
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- Figure 5: Expected impact of the EU vote on respondents’ household income, by current financial situation, July 2016
Current Financial Situation
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- What you need to know
- Sentiment was shaken by the Brexit vote, but has recovered
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- Figure 6: “How would you generally describe your financial situation at the moment?”, August 2016
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- Figure 7: The financial wellbeing index, February 2009-August 2016
- A vote for change?
Changes in Financial Wellbeing
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- What you need to know
- A quarter of people say their finances have improved over the last year
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- Figure 8: “How would you describe your finances compared to a year ago?”, August 2016
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- Figure 9: The recovery index, July 2011-August 2016
- A generation gap: Older workers are feeling the squeeze
- The short-term outlook for consumer incomes looks positive…
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- Figure 10: Average wage growth and consumer price inflation, 2007-16
- …but long term, prices are bound to be affected by Brexit
Financial Confidence
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- What you need to know
- Confidence rebounded strongly in August
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- Figure 11: “And how do you feel about your financial situation over the next year or so?”, August 2016
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- Figure 12: The financial confidence index, January 2009-August 2016
- The uncertainty is over…for now, at least
- Retirees are the most optimistic
Spending Plans
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- What you need to know
- Spending patterns have remained steady post Brexit-vote
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- Figure 13: “Thinking about how you spend your money, which of the following have you done over the last three months? And which do you plan to do over the next three months?”, August 2016
- The income divide: It’s still high earners who are driving spend
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- Figure 14: The financial activity index, June 2012-August 2016
What Does the Brexit Vote Mean for Key Consumer Markets?
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- Financial services
- Uncertainty could feed through into borrowing and saving choices
- An easing of growth in the mortgage market
- Further falls on interest rates hit saver…
- …but for many, saving is about emotion, not financial returns
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- Figure 15: Level of savings and investments, August 2016
- Brexit could be particularly damaging for those approaching retirement
- Regulatory perspective
- What it means
- Grocery retailing
- Intense competition will mitigate some of the impact of the falling pound
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- Figure 16: Consumer price inflation, overall index and food and drink categories, June 2014-June 2016
- Any changes to legislation will have an impact on costs
- Convenience has been the key driver in recent years
- Upheaval creates new opportunities
- What it means
- Fashion
- No immediate sign of a fall in spending intentions
- Exchange rates will have a major effect on an import-heavy market…
- …but they’ll also support overseas income
- On-shoring some manufacturing would play to the move to fast fashion
- What it means
- Beauty and personal care
- The “lipstick effect” underpins spend in tough times…
- …although some sectors are vulnerable to trading down
- Luxury BPC brands should benefit from a weaker pound
- Little possibility of legislative disruption
- What it means
- Food
- Little short-term reason to change food shopping behaviour…
- …but the weakening pound poses threat of rising food prices
- Continued savvy shopping on the cards
- Marked uncertainty looms over the long term
- What it means
- Alcoholic drinks
- No sign of people cutting back on nights out
- A very different alcoholic drinks market
- What it means
- Travel
- In the short-term, the weak pound could curb spending abroad
- If airlines can keep fares low, this could stimulate spending
- A shift in holiday destinations – both inbound and outbound
- Long term – It’s crucial that the UK keeps the EU’s ‘Open Sky’ terms
- What it means
- Spending on the home
- 2015 was a strong year for spending on the home…
- …but Brexit could well disrupt plans
- Big ticket purchases will be affected most
- Weaker pound will push up costs of goods in the medium term
- What it means
- Automotive
- The industry is starting from a position of strength
- Consumer confidence is key to the sector
- Longer-term prospects are tied to the strength of the economy
- What it means
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