A new study has found that those aged between 18 and 34-years-old remain optimistic about the British economy despite fears circulating Brexit. In the months following the EU referendum vote, the study found that the overall measure of consumer confidence remained buoyant.
In the Deloitte Consumer Tracker Q4 2016 [PDF], it found that confidence remained resilient and was particularly strong among the 18-34-year-olds. This is the highest it has been since the Tracker began six years ago. It is believed that this recovery is down to a growing confidence about disposable income and debt as well as their sentiment regarding job security, job opportunities, and career progression.
The report illustrated that of the six key indicators, which make up the confidence index, five of them rose in the past year. While confidence in the level of job security remained the same at -4 percent, it showed that so far Brexit has not done too much to lower consumers’ confidence about the job outlook.
According to the report, however, consumers have not changed their patterns regarding their spending. It found that essential and discretionary spending grew in Q4 2016.
Net spending on essentials rose by seven percentage points while net spending of discretionary categories increased by two percentage points compared to Q3 2016.
And yet, while this is certainly good news for the country as it maintains hold on its FinTech lead, the report adds that the upbeat results might not continue in 2017. As such, consumer confidence in disposable income dropped in Q4 2016 compared to Q3 2016 from -12 to -14 percent.
The report predicts that this could, essentially, be the start of a squeeze on consumers’ ability to spend as they would wish. Not only that, but higher inflation and a weaker pound are likely to be driving factors in this too.
Brexit Headwinds to be Expected
In light of the Brexit result, it remains to be seen what impact this will have during the year.
However, the latest Deloitte Survey of UK Chief Financial Officers demonstrates that since Brexit corporate perceptions remain high.
As such, the CFOs enter the New Year with keen interest on defensive strategies that include cost reduction and building up cash. With the formal Brexit process due to begin in March and higher inflation expected to impact how people spend, consumers’ are likely to face headwinds this year.
Of course, it remains to be seen how much of this will impact consumer confidence in the years ahead as the U.K. removes itself from the EU.
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