Brexit Vote Has Had Limited Effect on Consumers, BOE Says

Updated on
  • Expectations for home-price gains weaken, led by London
  • Consumer confidence held up well after vote to leave EU

Britain’s decision to leave the European Union had only a limited effect on households’ perceptions of their job security, incomes and spending, according to a survey by the Bank of England.

The biannual poll showed that consumers’ view of their ability to access credit was largely unchanged after the referendum in June, and there “has not been much increase in measures of uncertainty.” 

There was “some weakening in households’ expectations for future income, spending and house price growth, although these changes were relatively modest,” the BOE said on Friday.

Consumer spending has remained solid since the referendum, as has overall economic growth. As Britain counts down to the start of its formal exit process, the BOE survey will allow pro-Brexit campaigners to reinforce their view that the economic risks of leaving are overstated. They have long been critical of the pro-EU lobby for scaremongering, dubbing it “Project Fear.”

The BOE survey of about 6,000 people by NMG Consulting was conducted from Aug. 31 to Sept. 19. That’s before the government announced its time frame for triggering EU withdrawal and indications it favors a “hard Brexit” that could lead to barriers on trade with the bloc. Those developments helped send the pound down 5.6 percent in October, though it regained some ground the following month.

One of the main changes in consumer perceptions related to housing, with 12-month expectations for home-price inflation softening to 0.7 percent from 2.2 percent in the first half of the year. The biggest downward shift was in London.

The BOE noted that aggregate measures of consumer confidence deteriorated “slightly” after the Brexit vote, but “generally held up well,” and the net balance of households expecting to increase spending over the coming year fell “a little.”

Consumers were also asked how the referendum result had affected their finances and spending plans.

“Although it had no impact for most, a small net balance of households thought that the vote had worsened their personal financial positions,” the BOE said.