Commenting on whether consumer spend might ‘normalise’ now that the UK has officially left the EU, Linda Ellett, UK head of consumer markets at KPMG, said: “Now that the UK has technically left the European Union, consumers will likely be reassessing the impact Brexit has had – or will have – on their wallets. The conclusive results of the General Election last year saw the return of some certainty, albeit seemingly a little too late in the run-up to Christmas.
“The latest consumer confidence indicators would suggest that shoppers are thankfully beginning to feel more confident, which is likely to result in stronger spending. However, we have to remember that confidence and spend don’t always correlate. Indeed, in recent years and especially after shock-events like the Brexit vote itself, there have been notable deviations between the two.
“Coupled with low employment, low inflation and an uptick in the housing market, as well as interest rates remaining on hold currently, the ‘Boris-bounce’ could remove some of the trepidation consumers have felt around making significant purchases, including new cars or foreign holidays. We previously found that a third of Brits had been putting such purchases on hold3, so consumer businesses will undoubtedly welcome any release of pent-up demand.
“Given that consumer spend accounts for around two-thirds of the UK economy, improved confidence and increased spend can only be a good thing overall. But businesses and manufacturers still face the threat of potential delays and tariffs, which could impact their own finances. Fundamental questions, including what shape our future relationship with the EU will take, still remain. The confidence and spending power of businesses are just as important.”