The public expect a 'no deal' Brexit and plan to spend less - KPMG
A new survey has revealed that 7 in 10 think prices would rise and say they would change consumer behaviour if no deal is reached
A survey of 3,044 members of the British public commissioned by KPMG shows all demographic, employment and political groups believe a ‘No Deal’ Brexit is more likely than not (overall 54% said a ‘No Deal’ Brexit was likely and 20% said unlikely). The poll also reveals that a clear majority of UK respondents believe a 'No Deal' scenario would have a significant impact on their life: 70% think prices would rise and 69% say they would change their consumer behaviour. Also 45% believe a no-deal' scenario will be bad for the country compared with 25% who think it will be good. Despite these concerns about 'No Deal', the majority of voters have not changed their mind since the 2016 referendum. 89% of Leave voters said they would still vote leave and 93% of Remain voters said they would still vote remain.
Explaining the findings James Stewart, Head of Brexit at KPMG UK said: “This survey shows the public expect a ‘no deal’ Brexit and plan to spend accordingly. The results reveal how people are anticipating substantial disruption in the short to medium-term, before they expect Brexit to have a more positive effect on the economy in the medium to long term. During this period of disruption Brits expect prices to go up, delays at airports and sea ports, plus a potential hit to the pound. The mood music of the Brexit talks is likely to have a direct effect on consumer confidence.”
In terms of behavioural change in the event of a ‘no deal’ Brexit:
- 43% of the public said they were very likely or likely to cut everyday spending.
- 45% of the public said they were very likely or likely to cut non-essential spending.
- 48% of the public said they were very likely or likely to cut luxury spending.
- 47% of the public said they were very likely or likely to delay major purchases.
The people most likely to alter their consumer behaviour in the event of 'No Deal' (from stockpiling food to cutting essential spending) are: those with concerns about prices rising as a consequence of 'No Deal', those under 35 and those who are female.
Explaining how these findings could affect the retail industry, Paul Martin, Head of Retail at KPMG UK said: “Too few businesses have fully considered how consumer buying patterns may change if a no-deal scenario were to occur. We often find companies stockpiling inventory to mitigate potential customs delays without calculating how a squeeze on liquidity or a reduction in discretionary spend could affect their cashflow. Consumers, especially those of working age, are genuinely worried about price increases and travel delays and if no deal does become a reality we will see cutbacks on everything from the weekly shop, to handbags, holidays, cars and other major purchases.”
With Brexit bringing so much uncertainty, the British public are keen to hear more about what may lie ahead from several groups. Chief amongst them are small businesses, farmers, manufacturers, exporters and NHS staff. Leavers in particular also want to hear more from the fishing industry.